InSight

Paid Family and Medical Leave Tax Credit Expanded

Financial Planning Dentist

The “Big Beautiful Bill” made a key change to the Paid Family and Medical Leave (PFML) Tax Credit, extending and expanding it in ways that affect both employers and employees.

Permanent Extension

Previously set to expire at the end of 2025, the PFML credit is now permanent. This provides long-term stability for businesses planning their benefits programs.

Planning consideration: Permanency makes it easier for companies to confidently integrate this credit into their workforce strategy rather than treating it as a temporary incentive.

Lower Work Requirement

Employees now qualify after six months on the job, rather than having to complete a full year of service. This change widens access and encourages workplace flexibility.

Planning consideration: Businesses that experience higher turnover or seasonal employment may find this especially impactful, as more workers can qualify sooner.

Two Ways to Claim the Credit

Employers can choose one method (but not both):

  1. Wages Paid: Claim a portion of wages paid to qualifying employees while on leave.
  2. Insurance Premiums: Claim a portion of premiums paid for PFML insurance policies, even if no leave is taken.

Planning consideration: This flexibility lets companies align the credit with their benefits structure, whether they self-fund leave or use an insurance policy.

The Bottom Line

The expansion of the PFML credit is designed to help businesses support employees during critical life events while also offering financial relief. But offering paid leave still comes at a cost, especially for smaller employers who may struggle to redistribute workloads during absences.

Employers should carefully evaluate which credit option (wages vs. premiums) fits their organization best and how to integrate this incentive into their long-term benefits strategy.

 

More related articles:

Articles
Peter Locke

Qualified Opportunity Zones Extended

The “Big Beautiful Bill” (OBBBA) reshaped the Qualified Opportunity Zone (QOZ) program, a tax incentive first introduced in 2017 to encourage investment in designated low-income communities. While the original program was set to expire in 2026, OBBBA created a more permanent version starting in 2027, with updated rules and a

Read More »
Articles
Kevin Taylor

Divorce Playbook: When Should You Consider Mediation 

Alternatives to the courts for legal separation are called mediation and determining early on if this arrangement is right for you can be important to moving forward. The relationship you have with your spouse might determine much of this, but the expected outcome is what is most important. Mediation does

Read More »

Pin It on Pinterest