Under the Tax Cuts and Jobs Act, employers can claim a credit of the wages paid to employees who take time off under the federal Family and Medical Leave Act.
Prior Law
Through December 31, 2017
Under pre-Act law, for 2017, no such credit exists.
New Law
Effective for tax years beginning after December 31, 2017
An employer must have a written 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.
Employers may claim a credit for 12.5% of the wages paid to qualifying employees during FMLA if the payment rate under the program is 50% of the wages normally paid to an employee.
The credit is increased by 0.25 percentage points (not to exceed 25%) for each percentage point by which the rate of payment exceeds 50%.
Commentary
The following shall not be considered when determining the amount of paid family and medical leave provided by the employer: State or local government paid leave; employer paid vacation leave; employer paid personal leave; or employer paid medical/sick leave.
Article written by: Marie Belter
