Tax Reform: Employer credit provides incentive for paid family and medical leave

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Overview

The 2017 Tax Cuts and Jobs Act established new Section 45S of the Internal Revenue Code, which provides a business tax credit for certain employer-paid family and medical leave. The paid family and medical leave credit ranges from 12.5 percent to 25 percent of the amount of wages paid to qualifying employees for 2 to 12 weeks of family and medical leave annually, where such wage payments are at least 50 percent of the wages normally paid to an employee.

The paid family and medical leave credit is effective only for two years. The credit is available for wages paid in taxable years beginning after December 31, 2017 and not for wages paid in taxable years beginning after December 31, 2019.

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Kelley McLaughlin

US Tax Marketing Leader, PwC US

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