Yet another provision to the Tax Cuts and Jobs Act (TCJA), employers who traditionally provide paid family leave to their employees, now have a new and improved tax credit available to them.
Eligible through the years 2018 and 2019, the IRS affirms that for employers who either establish or fix existing paid family leave programs to qualify by December 31st, the employer credit can be applied for the entire tax year of 2018.
There are a few changes as to what is considered “qualifying” paid family leave, however.
In addition to the traditional stipulation that employee compensation must not exceed $72,000 to qualify for the credit, the paid family leave policy must also:
• Provide at least two weeks of paid medical and family leave for every full-time employee, along with a similar amount for every part-time employee;
• All paid leave must be at least 50% of the employee’s usual paycheck; and
• Any paid leave given or taken by state or local government is not to be considered into the amount of the employee compensation at all.
For more details on how to apply for the tax credit, calculate your amount, and the surrounding rules and limitations, check out the official IRS Notice 2018-71.