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Treasury and IRS Issue Guidance for Paid Family
& Medical Leave Tax Credit
On Aug. 5, 2026, the Treasury Department and the IRS issued Notice 2026-28, providing guidance on amendments made by the One Big Beautiful Bill Act (OBBBA) to an employer credit in the IRS Code for paid family and medical leave (PFML). The changes have been in effect for taxable years beginning after Dec. 31, 2025.
Section 45S of the Code allows a tax credit for certain employer expenses incurred as a result of providing PFML. Before the OBBBA was passed in July 2025, the credit was scheduled to expire on Dec. 31, 2025. The OBBBA made the credit permanent and extended its coverage to a percentage of any premiums an employer paid for a PFML insurance policy, regardless of whether employees actually took PFML during the tax year. Previously, the credit was available only for a percentage of the wages of employees on PFML. The amendments also allowed the credit for leave taken by employees who have worked for their employer for only six months (down from one year). The OBBBA limited the credit to leave taken by employees who work at least 20 hours per week.
Employers must provide at least two weeks of PFML for the credit to apply.
Read all the details HERE
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