Family Medical Leave Act Tax Credit Services
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Why Supporting Employees Matters
FMLA Tax Credit Background
The Family and Medical Leave Act Tax Credit was launched as part of the December 2017 Tax Cuts and Jobs Act. Beginning in 2018, employers with qualified leave policies can offset a percentage of the wages disbursed for qualifying paid leaves. After one year of employment, employees earning up to the designated earnings threshold can generate a tax credit for their employer.
Employee Eligibility and Timeline
For employees to qualify, their income must have been no more than the statutory limit in the prior year. Both full- and part-time employees can qualify. Qualified employees can earn credit for up to 12 weeks of paid leave. The credit has been extended to run through the end of 2025.
In order for employers to qualify for the tax credit, the business must have a documented FMLA paid leave policy. That policy must provide full-time workers with at least two weeks of paid leave each year. Part-time employees should receive pro-rated compensation according to the number of hours worked. The wages paid for this leave must not be less than 50% of normal wages.