• Denise Hue

New Employer Credit for Paid Family and Medical Leave

This general business credit is a percentage of the amount of wages paid to a qualifying employee while on family and medical leave for up to 12 weeks per taxable year. The credit is generally effective for wages paid in taxable years beginning after Dec. 31, 2017, and before Jan. 1, 2021.

Federal law does not require employers to pay for family and medical leave, even though businesses with 50 or more employees must give time off for specified family and medical reasons.

However, under the Tax Cuts and Jobs Act of 2017, employers that choose to offer paid leave (whether subject to the unpaid leave requirement) may be eligible for a tax credit.

The credit can be claimed if

(1) you give at least 2 weeks of family and medical leave (not merely sick, personal, or vacation days) under a written policy and

(2) pay at least 50% of regular earnings. The amount of the credit ranges from 12.5% to 25% of the paid leave, depending on the percentage of preleave wages being paid.

For 2019, the credit can only be claimed for an employee who earned up to $72,000 in 2018.

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