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Employer Credit for Paid Family and Medical Leave

Under tax reform, eligible employers who provide paid family and medical leave to their employees in 2019 may qualify for a business credit.

To qualify, an employer must have a written policy that provides:

At least two weeks of paid family and medical leave annually to full-time employees, prorated for part-time employees.Family and medical leave pay that is at least 50% of employee’s wages.

Other facts:

For tax year 2018 and 2019, the employee must earn $72,000 or less to qualify.The credit ranges from 12.5% to 25% of wages paid for qualifying employees.Some employers are eligible to claim the credit retroactively.

The credit is available for qualified wages paid in tax years beginning after Dec. 31, 2017, and before Jan. 1, 2020. Generally, tax year 2019 is the last year most employers are eligible to claim the credit.

Family and Medical Leave Act The Family and Medical Leave Act of 1993 required covered employers to provide employees with job-protected and unpaid leave for qualified medical and family reasons. The law allows certain employees with up to 12 weeks of unpaid, job-protected leave per year. It also protects the employee’s group health benefits during the leave period.

FMLA is designed to help employees balance their work and family responsibilities by allowing them to take reasonable unpaid leave for specific family and medical reasons.

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