Extension and Enhancement of Paid Family and Medical Leave Credit
Section 70304 · Sec. 70304 ·
What this chapter is about
This part lets an employer claim a leave credit on wages or on insurance premiums. It sets when firms must be grouped as one employer. Leave that a state pays for does not count toward the credit. A worker must work at least 20 hours a week to count.
The document says “can”Who acts: eligible employersHow: statuteSec. 70304 in the PDF
What the document says
“the paid family and medical leave credit is an amount equal to either of the following (as elected by such employer):”
The section strikes paragraph (1) of section 45S(a) of the Internal Revenue Code of 1986 and inserts a new one letting an eligible employer choose between the applicable percentage of wages paid to qualifying employees while on family and medical leave and, where the employer holds a paid family and medical leave insurance policy in force during the year, the applicable percentage of the premiums paid or incurred on that policy.
What the document actually says
“the paid family and medical leave credit is an amount equal to either of the following (as elected by such employer):”
That sentence, in plain words
The credit is one of two amounts. The employer picks which one.
What this is about
One is a share of the wages paid during leave. The other is a share of the insurance premiums. The employer chooses each year.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall”Who acts: Secretary of the TreasuryHow: statuteSec. 70304 in the PDF
What the document says
“For purposes of determining the applicable percentage with respect to paragraph (1)(B), the rate of payment under the insurance policy shall be determined without regard to whether any qualifying employees were on family and medical leave during the taxable year.”
The section provides that for the credit taken on premiums, the rate of payment under the insurance policy is worked out without regard to whether any qualifying employee was on family and medical leave in the year.
What the document actually says
“For purposes of determining the applicable percentage with respect to paragraph (1)(B), the rate of payment under the insurance policy shall be determined without regard to whether any qualifying employees were on family and medical leave during the taxable year.”
That sentence, in plain words
The rate under the policy is worked out one way. It does not matter whether any worker took leave that year.
What this is about
So an employer who buys cover still qualifies. The credit follows the policy, not the claims. That holds for the premium option only.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall”Who acts: Secretary of the TreasuryHow: statuteSec. 70304 in the PDF
What the document says
“all persons which are treated as a single employer under subsections (b) and (c) of section 414 shall be treated as a single employer.”
The section strikes paragraphs (3) and (4) of section 45S(c) of the Internal Revenue Code of 1986 and inserts a rule treating all persons treated as a single employer under section 414(b) and (c) as one employer, except where a person shows the Secretary a substantial and legitimate business reason for not having a written policy. That reason does not include running a separate line of business, the rate of wages or category of jobs, or State or local family and medical leave law, but may include the grouping of employees of a common law employer.
What the document actually says
“all persons which are treated as a single employer under subsections (b) and (c) of section 414 shall be treated as a single employer.”
That sentence, in plain words
Firms that count as one employer under an older rule are treated as one here too.
What this is about
A firm may get out of that. It must show the Secretary a real business reason. Wage rates and job types do not count as one.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall not”Who acts: Secretary of the TreasuryHow: statuteSec. 70304 in the PDF
What the document says
“shall not be taken into account in determining the amount of the paid family and medical leave credit under subsection (a).”
The section provides that leave paid by a State or local government or required by State or local law counts in working out how much paid family and medical leave the employer provides, but does not count in working out the amount of the credit.
What the document actually says
“shall not be taken into account in determining the amount of the paid family and medical leave credit under subsection (a).”
That sentence, in plain words
Leave the state pays for does not count toward the credit.
What this is about
It does count toward the leave the employer offers. So it helps the firm qualify. It does not raise the credit itself.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
“is customarily employed for not less than 20 hours per week.”
The section amends subsection (d) of section 45S of the Internal Revenue Code of 1986 to let the employer elect a six month service test in place of one year, to work out compensation on an annualized basis pro rata for part-time employees, and to add a requirement that the employee is customarily employed for at least 20 hours a week. It also strikes subsection (i).
What the document actually says
“is customarily employed for not less than 20 hours per week.”
That sentence, in plain words
The worker must normally work 20 hours a week or more.
What this is about
The employer may also count workers with six months of service. Pay is worked out on a yearly basis. Part-time pay is scaled to hours.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall not”Who acts: Secretary of the TreasuryHow: statuteSec. 70304 in the PDF
What the document says
“No deduction shall be allowed for that portion of the premiums paid or incurred for the taxable year which is equal to that portion of the paid family and medical leave credit which is determined for the taxable year under section 45S(a)(1)(B).”
The section amends section 280C(a) of the Internal Revenue Code of 1986 to point to section 45S(a)(1)(A) and to bar a deduction for the part of the premiums equal to the part of the credit worked out on premiums.
What the document actually says
“No deduction shall be allowed for that portion of the premiums paid or incurred for the taxable year which is equal to that portion of the paid family and medical leave credit which is determined for the taxable year under section 45S(a)(1)(B).”
That sentence, in plain words
No deduction is given for part of the premiums. That part matches the credit taken on them.
What this is about
That stops the same cost getting two breaks. The rest of the premium may still be deducted. The tax code is not indexed here.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall apply”Who acts: Secretary of the TreasuryHow: statuteSec. 70304 in the PDF
What the document says
“The amendments made by this section shall apply to taxable years beginning after December 31, 2025.”
The section applies its amendments to taxable years beginning after December 31, 2025.
What the document actually says
“The amendments made by this section shall apply to taxable years beginning after December 31, 2025.”
That sentence, in plain words
The changes start with tax years that begin after December 31, 2025.
What this is about
Earlier tax years are not touched. The old rules still hold for them. The date is fixed in the law.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
Each distinct thing the section does: give the employer a choice between a credit on wages and a credit on premiums, fix the rate without regard to whether leave was taken, set the aggregation rule and its exception, deal with State or local paid or mandated leave, change who counts as a qualifying employee, bar a double benefit for premiums, and fix the effective date.
The striking of subsection (i) and the wording change in subsection (b)(1) from credit allowed to wages taken into account are carried in summaries rather than recorded as their own proposals.
The section works by amending sections 45S and 280C(a) of the Internal Revenue Code of 1986 and points to section 414 of that Code, none of which is indexed here, so how the credit is otherwise worked out cannot be checked against anything on this site.
