According to our team of HR experts, you may be able to save money on your federal taxes if you offer paid family and medical leave to certain employees. Here’s an excerpt from their full article:
Signed on December 22, 2017, the Tax Cuts and Jobs Act (US H.B. 1) created a federal tax credit (IRC § 45S) for employers that annually and voluntarily offer up to 12 weeks of paid family and medical leave to qualifying employees under a written policy. A qualified employee is someone who works for the employer for at least one year and who was paid no more than 60 percent of the highly compensated employee (HCE) rate during the preceding year ($72,000 for 2017 and 2018).
Starting in tax year 2018, employers will receive a tax credit between 12.5 and 25 percent of wages the employer pays to an employee who qualifies for and uses the federal Family and Medical Leave Act (FMLA). Specifically, the tax credit will cover 12.5 percent of the benefit’s costs if an employee receives 50 percent of their normal wages; the tax credit incrementally increases to a max of 25 percent if an employee receives their full wages while on an FMLA leave.
However, the key to this tax credit is an employer’s written policy, which must guarantee an eligible employee at least two weeks of paid time off for FMLA leave. Read the full article.
Learn more about federal and state tax credits for small businesses in Georgia.