Month: August 2026

Employers, including small businesses, that provide paid family and medical leave to their employees may be eligible for an employer tax credit. Several enhancements have been made to this credit under the Working Families Tax Cuts.

Here’s an overview of the employer credit for Paid Family and Medical Leave, including the recent changes.

What is the employer credit for PFML?

Employers who meet the requirements can claim a general business tax credit from 12.5% to 25% of wages paid to qualifying employees for up to 12 weeks of family and medical leave per taxable year.

Employers can offer up to 12 weeks of paid family and medical leave to employees for the following reasons:

• Having a baby, adopting or fostering a child
• Taking care of their own serious health condition or for their spouse, child, or parent
• Dealing with a situation of a close relative who is a member of the Armed Forces and on covered active duty
• Taking care of a close relative who is seriously ill or an injured covered servicemember

Key enhancements:

• The credit is now permanent.
• Expanded eligibility: Employers can claim the credit for employees with six months of service and for part-time employees working 20 hours or more per week.
• Expanded coverage: Employers can claim the credit for insurance premiums paid to provide leave, or wages paid during leave.
• State and local mandates: Employers can count leave provided under state or local mandates toward the eligibility for this federal tax credit, but not toward the credit calculation.

Ways to claim the credit

Employers can claim the credit using one of these methods:

• New premium-based: Based on qualifying premiums the employer paid for PFML insurance policies
• Wage-based: Based on the wages paid while the employee is on PFML

There are several kinds of major life events that can affect your income tax requirements, tax benefits and withholding. It could be marriage, welcoming a new child, divorce, or loss of a loved one — all of these can impact your tax situation. Here are some common life events and an overview of their effects.

Marriage

Getting married may affect your filing status, tax withholding and eligibility for certain tax benefits. Newly married couples should report any name change to the Social Security Administration and any address change to the U.S. Postal Service, employers and the IRS. They should also review their tax withholding and update their W-4 with their employer, if needed.

Birth or adoption of a child

A new child may make you eligible for tax benefits, including the Child Tax Credit, Adoption Credit or Child and Dependent Care Credit. There are individual eligibility requirements for each type of credit. You must have a valid Social Security number along with the child, to apply.

Divorce or legal separation

Getting divorced or legally separated affects filing status, tax withholding, who can claim dependents, and eligibility for certain credits and deductions. Changes to income, withholding and filing status may require you to update your Form W-4.

Death of a spouse or family member

The death of a spouse or loved one can affect your filing requirements and status. In general, a final individual income tax return of a deceased person should be filed the same way if the person were alive. All income must be reported up to the date of death along with the claiming of any eligible credits or deductions.

After any major life event, you should review your withholding, update your personal information and keep important records. If you need help understanding how these changes might affect your tax situation, please contact our office.