The U.S. Department of the Treasury announced new guidance that expands incentives for employers to offer paid family leave for children and the ill.
The new guidance, rooted in the Working Families Tax Cuts (WFTC), provides employers with greater incentives to “offer up to 12 weeks of paid leave,” the Treasury’s announcement read. “Employees may use the leave to recover from a serious health condition or to care for certain family members with serious health conditions.” The credit offered through the WFTC expands eligibility, coverage, and counts leave provided through state and local mandates.
“Hardworking Americans should not have to choose between caring for a loved one and earning a paycheck,” Treasury Secretary Scott Bessent said in a statement. “The Working Families Tax Cuts permanently expands the federal Paid Family and Medical Leave Tax Credit, giving businesses, especially small businesses, greater incentives to provide paid leave so workers can care for a newborn or other family member or recover from a serious illness without sacrificing their financial security.”
“Today’s guidance provides employers with the clarity they need to claim the enhanced credit, supporting American workers, families, and businesses,” he said.
According to the guidance: “As amended, section 45S(a)(1) provides that the employer may elect to determine the amount of the credit based on either the wages actually paid to qualifying employees while they are on family and medical leave (the wage method), or, if the employer maintains an insurance policy with regard to the provision of paid family and medical leave during the taxable year, the premiums paid or incurred by the employer with respect to that insurance policy during the taxable year (the premium method).”
The new policy comes from President Trump’s One Big Beautiful Bill Act, which also encouraged families to launch “Trump Accounts” for their children.
