Employer Credit for Paid Family & Medical Leave
Your business could increase cash flow and reduce federal income tax liability through tax credits if you provide employees with paid family and medical leave benefits.
Providing extended time off and support for your employees to focus on their health and family may be part of your business culture, but it could also help you increase your cash flow and reduce federal income tax liability.
Businesses that voluntarily provide a paid family and medical leave benefit to employees could be eligible for the employer-paid family and medical leave tax credit — IRC Section 45S — a nonrefundable credit that may be used to offset federal income tax.
Determining your eligibility and accurately calculating and claiming the credit can be a complex process. Confidently pursue the credit and put money back into your business with guidance from our professionals.
Eligibility and savings overview
To claim the credit, your business and employees who take advantage of paid leave must meet certain requirements.
Business criteria
Your organization must have policies in place that provide a minimum of:
- Two weeks paid family and medical leave — not including state or federal paid or mandated Family Medical Leave Act (FMLA) leave
- Paid leave — not including vacation, personal, or sick time — of at least 50% of an employee’s normal wages or salary
Policies must also include leave that covers one or more of the following:
- Birth of a child
- Adoption or fostering of a child
- Care for a spouse or family member with a serious health condition
- Employee’s own serious health condition
