Gluesenkamp Perez, Bipartisan Colleagues Introduce Bill to Help Small Businesses Offer Paid Family and Medical Leave

Today, Rep. Marie Gluesenkamp Perez (WA-03), along with  Reps. Randy Feenstra (IA-04) and Stephanie Bice (OK-05), introduced the bipartisan Paid Family and Medical Leave Tax Credit Extension and Enhancement Act to help small businesses offer paid family and medical leave (PFML) to their employees.

This legislation specifically extends and reforms the 45S tax credit – which was a two-year tax credit authorized by the Tax Cuts and Jobs Act of 2017 and later extended by Congress through the end of 2025 – for employers that voluntarily offer up to 12 weeks of PFML. The legislation builds on the 2017 law to better serve working families and hourly workers. It also provides additional ways for businesses to qualify for the paid leave tax credit, such as paying for PFML insurance products, and requires greater outreach efforts to raise awareness about the credit.

“Taking care of your health, newborn, or family when they’re most in need shouldn’t come at the cost of paying the bills. Strong families mean strong communities and local economies,” said Rep. Gluesenkamp Perez. “With the paid family and medical leave tax credit due to expire, our bipartisan legislation will make this successful credit permanent and expand access for Washington-based businesses and newer employees, so more families can feel the benefits.”

More specifically, this legislation improves the 45S tax credit available to small businesses that provide PFML, expanding it to include PFML provided through an insurance company or in a state with a mandate. The bill will also reduce the minimum time a worker must be employed to claim the credit from one year to 6 months to more quickly support young employees who are starting their families and provide resources and outreach to help guide and educate small businesses about the use of the credit.

According to the Bureau of Labor Statistics, more than 41 percent of employees at businesses with more than 500 employees have access to PFML while just 20 percent of workers at businesses with fewer than 99 employees have access to PFML.

“Paid family and medical leave (PFML) is a lifeline for workers when facing a medical condition or welcoming a newborn into the world. The Tax Cuts and Jobs Act recognized the importance of PFML by helping American small businesses offer these benefits to their employees through the creation of a targeted tax credit specifically for small businesses. However, along with many other policies, this provision expires at the end of the year without action from Congress,” said Rep. Feenstra. “That’s why I introduced legislation to extend and improve this tax credit for our small businesses so that they can provide their workers with up to 12 weeks of PFML without missing a paycheck. As a member of the House Ways and Means Committee, I believe that, by making this policy permanent, we can deliver certainty for our small businesses, keep our workers healthy and employed, and grow our economy and rural communities.”

“The 45S tax credit, first implemented under the Trump administration, has been instrumental in helping many employers expand paid family leave benefits for their workers. However, awareness and uptake of this credit have been lower than we’d like,” said Rep. Bice. “This legislation, which I’m pleased to introduce alongside my colleagues, will improve the credit, make it more flexible, increase employer awareness, and make the tax credit permanent.”

“America’s working families drive our economy forward and strengthen our communities. They shouldn’t have to choose between earning a paycheck and caring for their loved ones. That’s why Senator King and I passed the first-ever nationwide paid family leave law,” said Sen. Fischer. “Now, we need to make our legislation permanent and expand access to ensure that even more businesses can provide paid family leave to the workers who keep them running. I’m determined to get this key legislation included in whatever tax package Congress considers this year.”

“I have often said that Maine is one big town with long roads and when a member of our community is hurting, we drop everything to take care of our own. However, no one should have to choose between caring for our families or receiving the next paycheck to put food on the table,” said Sen. King. “That’s why I’ve been working with my Republican colleague, Deb Fischer of Nebraska, to introduce the Paid Family and Medical Leave Tax Credit Extension and Enhancement Act which makes the PFML tax credit permanent. When families have access to care, they are able to succeed both at home and in their professional careers. Child care is more than a household priority; child care means business!”

The legislation builds on the existing credit by:

• Making the Credit Permanent: Provides certainty to businesses taking the leap to offer paid family and medical leave. 
• Updating the Treatment of Paid Leave Required by State or Local Mandates: Allows eligible employers to receive the credit for leave provided in states without PFML mandates or for leave offered in excess of any state or local mandate. Currently, employers providing PFML under state or local government mandates are ineligible for the credit, meaning that some employers with operations in both non-mandate and mandate states are ineligible for the credit.
• Supporting Coverage of PFL Insurance Premiums: Allows employers to claim the credit for premiums paid for PFML insurance products that cover qualifying employees. The structure mirrors the current credit, enabling employers to receive up to a 25 percent credit towards yearly premiums, depending on the percentage of wages the insurance plan replaces.
• Reducing the Minimum Employment Period Requirement: Provides employers the option to offer PFML to employees at six months and better target the credit towards younger workers.
• Requiring Greater Outreach and Awareness: Requires the Small Business Administration and Internal Revenue Service to conduct targeted outreach, education, and technical assistance to assist in increasing awareness of the credit.

Full text of the bill is available here.

The lawmakers previously introduced the legislation in the 118th Congress.

Sens. Deb Fischer (NE) and Angus King (ME) introduced companion legislation in the U.S. Senate.