Today, Congress passed its final version of H.R.1-Tax Cuts and Jobs Act. Among major tax changes in this bill is a provision that has not received a lot of media attention: a tax credit to employers providing paid leave for FMLA leave reasons. Reasons include an employee’s serious health condition, care of a family member, parental leave, and leave due to exigencies arising from an employee’s family member’s military deployment.
An employer is eligible for the credit if they have a policy that provides a minimum of two weeks’ paid FMLA leave for full-time employees, or a proportionate amount of leave for part-time employees. Employers may receive credit for up to 12 weeks of pay at the rate the employee would have been paid, had the employee been actively working. The credit is based on a percentage of paid wages starting at 12.4% and escalating depending on the rate of payment.
The bill is currently awaiting the president’s signature and will go into effect for paid leaves after January 1, 2018.
More employers are offering generous benefit packages, including paid leave, and the H.R.1-Tax Credit is another incentive to do so. If you’re struggling with managing leave of absence, including company paid leave, ReedGroup has several solutions for you. Please visit us here for more information.