HR 1424119th CongressIn Committee

To amend the Internal Revenue Code of 1986 to increase the employer tax credit for paid family and medical leave.

Introduced: Feb 18, 2025

Standard Summary

Comprehensive overview in 1-2 paragraphs

This bill, introduced in the House as H.R. 1424, would substantially boost the federal employer tax credit for providing paid family and medical leave. It increases the credit percentages in several places (from 12.5% to 25%, from 25% to 50%, and from 0.25 percentage points to 0.50 percentage points). It also removes a sunset provision, making the credit permanent. The changes would apply to taxable years beginning after December 31, 2025 (i.e., starting in 2026). The underlying purpose is to lower the after-tax cost for employers who offer paid family and medical leave, thereby encouraging broader access to paid leave for employees.

Key Points

1Increase in credit percentages: the bill raises the applicable credit rate from 12.5% to 25%, and from 25% to 50%, with a corresponding increase from 0.25 percentage points to 0.50 percentage points.
2Make the credit permanent: the bill strikes the current sunset provision (Section 45S(f)), ensuring the credit does not expire.
3Effective date: the changes apply to taxable years beginning after December 31, 2025 (starting in 2026).
4Scope remains tied to the existing employer credit for paid family and medical leave: the credit is a component of the Internal Revenue Code designed to offset part of the wages paid for qualifying leave.
5No new program created: the bill enhances the existing credit rather than adding a new benefit program; lenders/taxpayers will see a larger credit if they provide paid leave.

Impact Areas

Primary: Employers who provide paid family and medical leave. They would face a lower net cost of offering leave due to a larger payroll tax credit, potentially incentivizing broader or more generous leave benefits.Secondary: Employees using paid family or medical leave. With greater employer incentives, more employers may offer paid leave, improving access and stability for workers needing time off.Additional impacts:- Federal revenue and budget considerations due to a larger tax credit reducing tax receipts from employers.- Administrative effects for employers and payroll processors, who must apply the larger credit on the appropriate tax forms beginning in 2026.- Interaction with existing paid leave policies (federal, state, and employer-based) as the larger credit may influence employer planning and benefit design.

Generated by gpt-5-nano on Nov 18, 2025