S. 400

119 S400 IS: Paid Family and Medical Leave Tax Credit Extension and Enhancement Act
 U.S. Senate
 2025-02-04
 text/xml
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 II  119th CONGRESS  1st Session  S. 400  IN THE SENATE OF THE UNITED STATES   February 4, 2025   Mrs. Fischer  (for herself and  Mr. King ) introduced the following bill; which was read twice and referred to the  Committee on Finance    A BILL
To amend the Internal Revenue Code of 1986 to enhance the paid family and medical leave credit, and for other purposes.
1.
Short title
This Act may be cited as the   Paid Family and Medical Leave Tax Credit Extension and Enhancement Act  .
2.
Enhancement of paid family and medical leave credit
(a)
In general
 Section 45S  of the Internal Revenue Code of 1986 is amended—
(1)
in subsection (a)—
(A)
by striking paragraph (1) and inserting the following:
(1)
In general
For purposes of section 38, in the case of an eligible employer, the paid family and medical leave credit is an amount equal to either of the following (as elected by such employer):
(A)
The applicable percentage of the amount of wages paid to qualifying employees with respect to any period in which such employees are on family and medical leave.
(B)
If such employer has an insurance policy with regards to the provision of paid family and medical leave which is in force during the taxable year, the applicable percentage of the total amount of premiums paid or incurred by such employer during such taxable year with respect to such insurance policy.
 , and
(B)
by adding at the end the following:
(3)
Rate of payment determined without regard to whether leave is taken
For purposes of determining the applicable percentage with respect to paragraph (1)(B), the rate of payment under the insurance policy shall be determined without regard to whether any qualifying employees were on family and medical leave during the taxable year.
 ,
(2)
in subsection (b)(1), by striking  credit allowed  and inserting  wages taken into account ,
(3)
in subsection (c), by striking paragraphs (3) and (4) and inserting the following:
(3)
Aggregation rule
(A)
In general
Except as provided in subparagraph (B), all persons which are treated as a single employer under subsections (b) and (c) of section 414 shall be treated as a single employer.
(B)
Exception
(i)
In general
Subparagraph (A) shall not apply to any person who establishes to the satisfaction of the Secretary that such person has a substantial and legitimate business reason for failing to provide a written policy described in paragraph (1) or (2).
(ii)
Substantial and legitimate business reason
For purposes of clause (i), the term  substantial and legitimate business reason  shall not include the operation of a separate line of business, the rate of wages or category of jobs for employees (or any similar basis), or the application of State or local laws relating to family and medical leave, but may include the grouping of employees of a common law employer.
(4)
Treatment of benefits mandated or paid for by State or local governments
For purposes of this section, any leave which is paid by a State or local government or required by State or local law—
(A)
except as provided in subparagraph (B), shall be taken into account in determining the amount of paid family and medical leave provided by the employer, and
(B)
shall not be taken into account in determining the amount of the paid family and medical leave credit under subsection (a).
 ,
(4)
in subsection (d)—
(A)
in paragraph (1), by inserting  (or, at the election of the employer, for not less than 6 months)  after  1 year or more , and
(B)
in paragraph (2)—
(i)
by inserting  , as determined on an annualized basis (pro-rata for part-time employees),  after  compensation , and
(ii)
by striking the period at the end and inserting  , and , and
(C)
by adding at the end the following:
(3)
is customarily employed for not less than 20 hours per week.
 , and
(5)
by striking subsection (i).
(b)
No double benefit
 Section 280C(a)  of the Internal Revenue Code of 1986 is amended—
(1)
by striking  45S(a)  and inserting  45S(a)(1)(A) , and
(2)
by inserting after the first sentence the following:  No deduction shall be allowed for that portion of the premiums paid or incurred for the taxable year which is equal to that portion of the paid family and medical leave credit which is determined for the taxable year under section 45S(a)(1)(B). .
(c)
Outreach
(1)
SBA and resource partners
Each district office of the Small Business Administration and each resource partner of the Small Business Administration, including small business development centers described in section 21 of the Small Business Act ( 15 U.S.C. 648 ), women's business centers described in section 29 of such Act ( 15 U.S.C. 656 ), each chapter of the Service Corps of Retired Executives described in section 8(b)(1)(B) of such Act ( 15 U.S.C. 637(b)(1)(B) ), and Veteran Business Outreach Centers described in section 32 of such Act ( 15 U.S.C. 657b ), shall conduct outreach to relevant parties regarding the paid family and medical leave credit under  section 45S  of the Internal Revenue Code of 1986, including through—
(A)
targeted communications, education, training, and technical assistance; and
(B)
the development of a written paid family leave policy, as described in paragraphs (1) and (2) of  section 45S(c)  of the Internal Revenue Code of 1986.
(2)
Internal Revenue Service
The Secretary of the Treasury (or the Secretary's delegate) shall perform targeted outreach to employers and other relevant entities regarding the availability and requirements of the paid family and medical leave credit under  section 45S  of the Internal Revenue Code of 1986, including providing relevant information as part of Internal Revenue Service communications that are regularly issued to entities that provide payroll services, tax professionals, and small businesses.
(d)
Effective date
The amendments made by this section shall apply to taxable years beginning after the date of enactment of this Act.