HR-996-119
Referred to the House Committee on Ways and Means.
Sponsored by Randy Feenstra (R-IA)
What it does
This bill would amend Section 45S of the tax code to let employers claim the paid family and medical leave credit based on either wages paid during leave or premiums paid for a qualifying leave insurance policy. It would change eligibility rules, including allowing employers to count employees after 6 months of service instead of 1 year, require employees to work at least 20 hours per week to qualify, adjust how paid leave mandated by state or local governments is treated, and modify aggregation and double-benefit rules. It also directs the Small Business Administration and IRS to conduct outreach to employers about the credit.
Who benefits
Employers, especially small and mid-size businesses, that offer or purchase paid family and medical leave insurance policies, who would gain a new credit option based on premiums rather than only wages paid during leave. Employees at firms that expand leave offerings due to the credit's availability. Insurance companies selling paid leave policies, who may see increased demand. Businesses in states without mandated paid leave that adopt voluntary policies to claim the credit.
Who is hurt
Federal revenue is reduced by the expanded credit, which increases the federal deficit unless offset elsewhere. Employers with part-time workers under 20 hours per week would find those employees ineligible for credit-related coverage. Businesses in states with existing mandated paid leave programs may see limited additional benefit since state-mandated leave is generally excluded from the credit calculation. Taxpayers generally bear the cost of the reduced federal revenue over time.
Supporters argue
Supporters argue that allowing employers to claim the credit based on insurance premiums, rather than only wages paid during actual leave, encourages more businesses—particularly small businesses without the cash flow to pay leave wages directly—to adopt paid leave insurance policies. They contend that shortening the eligibility waiting period from one year to six months and adding IRS/SBA outreach requirements would expand awareness and uptake of a chronically underused credit, extending paid leave protections to more workers.
Opponents argue
Opponents argue that crediting employers for insurance premiums regardless of whether leave is actually taken could allow businesses to claim tax benefits without employees receiving real time off, since the bill specifies the rate is determined "without regard to whether" leave was taken. They contend the new 20-hour minimum work requirement could exclude many part-time workers, who are disproportionately women and caregivers, from the leave protections the credit is meant to encourage, undermining the policy's stated goal.