Sep 24 2018

Paid Family Leave Tax Incentive Guidance Issued

Fischer, King, Heller Bill Would Extend Historic Program to Continue Providing Flexibility for Working Americans

WASHINGTON, D.C. – Today, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) released guidance for employers, particularly small businesses, to offer Americans paid family leave through a tax incentive championed by U.S. Senator Deb Fischer (R-Neb.) in the Tax Cuts and Jobs Act. The program enacted is the first-ever U.S. nationwide paid family leave policy. Click here to view the guidance from the IRS. Click here to read Treasury’s press release.

Through this historic and voluntary program, employers can offer up to 12 weeks of paid family leave. The leave can be used to take care of a family member or utilized for maternity or paternity leave with biological or adopted children. In exchange for offering the leave, employers will receive as much as a 25 percent tax credit for the amount of wages replaced. As the policy is targeted to hourly employees who would not otherwise have access to paid family leave, employees who participate cannot make more than $72,000 per year.

Under current law, the program is a two-year tax credit. This was intended to give Congress the opportunity to determine its effectiveness. Because the guidance on using the credit was not issued until today, Fischer along with Senators Angus King (I-Maine) and Dean Heller (R-Nev.) have introduced new legislation: The Paid Family Leave Pilot Extension Act. The bill would extend this program for three more years through 2022. This extension would give businesses more time to implement a program, expand paid family leave for employees, and allow lawmakers to access sufficient data to assess the effectiveness of the program. Click here for a copy of the new bill.

“Now that this guidance is out, I encourage employers, especially small businesses, to take advantage of this opportunity to offer paid family leave. The program provides working families more flexibility as they balance caring for their loved ones with work obligations. Extending this tax-credit would give businesses more time to establish paid family leave and ensure this program is working for families,” said Senator Fischer.  

“Too many working parents struggle to balance the needs of their families with the needs of their job. Our outdated family leave policies have long hurt families and held back our economy – it’s time to bring these laws into the 21st century. Our bipartisan bill should be the first step towards providing American workers with more flexibility to make a living and care for themselves and their families,” said Senator King.

“As a member of the U.S. Senate Finance Committee, I worked to help write the Tax Cuts and Jobs Act, which established the first national paid family leave policy. I’m proud to continue working with Senators Fischer and King to help incentivize employers to implement a paid family policy that will help parents in Nevada take care of a newborn child or a sick family member. Nevadans shouldn’t be held back from a successful career because of responsibilities at home, and our legislation will give small businesses adequate time to put into effect a policy that works for them and gives Nevada families much-needed flexibility,” said Senator Heller.

Click here to view the guidance from the Internal Revenue Service. 

Click here to read Treasury’s press release. 

Click here for a copy of the Paid Family Leave Pilot Extension Act.

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