Is your company eligible for new FMLA tax credit?
The big tax bill signed into law around Christmas includes a welcome new federal tax credit for employers that offer paid family and medical leave to their employees. But pay attention to the fine print—not every employer can take advantage.
To receive the credit, employers need to provide full-time employees with at least two weeks of paid family and medical leave (as defined under the FMLA). Part-time employees must be provided with a commensurate amount of leave on a prorated basis. The maximum amount of leave that qualifies for the credit is 12 weeks. Employees must receive at least 50% of their regular salary while on leave. (Paid leave, such as vacation leave or other medical or sick leave, doesn’t count toward paid family and medical leave.)
The credit equals 12.5% of wages paid, and increases by 0.25% (up to 25%) for each percentage point by which the rate of pay exceeds 50%. The credit applies to wages paid in 2018 and 2019. Also, take note that employers will only be able to apply the credit toward workers who earn below $72,000 per year.
For more details on which employers and employees are eligible, see our full 15-page report on the new tax law at www.theHRSpecialist.com/2018tax.