The United States does not have a national paid family and medical leave policy, however, both Republican and Democratic leaders have agreed that these Paid Leave benefits are important to the American people. To encourage public adoption of these benefits, the federal government extended the tax credit through 2025 for businesses that choose to offer paid FMLA programs.
H. R. 133—1870 SEC. 116. EXPENSING RULES FOR CERTAIN PRODUCTIONS. (a) EXTENSION. —Section 181(g) is amended by striking ‘December 31, 2020’’ and inserting ‘‘December 31, 2025’’. (b) EFFECTIVE DATE. —The amendment made by this section shall apply to productions commencing after December 31, 2020.
To learn more about the federal PFML tax credit, including the IRS Form 8994 to claim the credit, visit: About Form 8994, Employer Credit for Paid Family and Medical Leave | Internal Revenue Service (irs.gov)
Proposed Federal Programs
Both the Democrats and Republicans have proposed federal programs that offer paid family leaves. The most recent draft bills are focused to amend the Internal Revenue Code of 1986 to enhance the paid family and medical leave credit noted above. Paid Family and Medical leaves, in general, are felt to be important to the general public, but has been overshadowed by other federal programs such as 2022 inflation and the economy.
As for a paid leave federal plan, Democrats would like to see a program similar to Social Security with a shared employee and employer tax (i.e., the Build Back Better – 4-week Paid Family Leave, or the Family and Medical Insurance Leave (FAMILY) Act). Republican plans look to delay the start of Social Security retirement benefits by any time taken to bond with their children (i.e., New Parents Act). In 2019, a bipartisan group recommended a hybrid proposal that would allow new parents to accelerate a portion of their child tax credit for immediate pay following the birth of a child. In exchange, the credit would be reduced over the following decade (i.e., ‘Paid Family Leave’ bill).
Even if a nationwide paid family and medical leave benefit is passed into law, it may not preempt state and local leave laws offering similar benefits. It may be similar to the federal unpaid FMLA law and the multiple states who have passed similar Family Leave Acts mandating job protections for employees who need leave. There is no doubt that Paid Family and Medical leaves will continue to be the topic of compliance conversations in the upcoming years.
As of March 1, 2023