OBBBA Enhances and Makes Permanent the TCJA Paid Family and Medical Leave Tax Credit

The TCJA created a new tax credit for employers that provide paid family and medical leave to qualifying employees. The original credit was temporary and, although extended once, was set to expire after 2025. The OBBBA made the Section 45S family and medical leave credit permanent and expanded its scope. Under the TCJA, “Qualifying employees” were those who had been employed by the employer for one year or more and who had compensation that did not exceed 60 percent of the compensation threshold for highly compensated employees for the prior year. Under the OBBBA, employers can claim the credit for paid leave provided to employees who have been employed by the employer for only six months. For more information on the changes made to the credit, visit Tax Facts Online. Read More: Link to Q3512. Note: Q is updated.