S-400-119
Read twice and referred to the Committee on Finance.
Sponsored by Deb Fischer (R-NE)
What it does
This bill would make the employer tax credit for paid family and medical leave permanent, removing its current expiration at the end of 2025. It would allow eligible employers to claim a credit of up to 25% of wages paid to qualifying employees on family or medical leave, or 25% of premiums paid for paid family or medical leave insurance. The bill would also shorten the employee tenure requirement from one year to six months, require that state- or locally-mandated leave be counted toward the employer's leave offering (but not toward the credit calculation), and direct outreach efforts to inform employers about the credit's availability.
Who benefits
Employers — particularly small and mid-sized businesses — who offer or begin offering paid family and medical leave and would receive a tax credit for doing so. Employees at those businesses who gain or retain access to paid leave, especially workers at companies that previously found the credit too administratively burdensome. Workers who have been employed for six months (rather than the current one year) who would newly qualify. Insurance companies offering paid family and medical leave products, who may see increased demand as employers can now claim the credit for premiums. Workers in states without state-mandated paid leave programs, who may benefit if the credit incentivizes their employer to offer leave voluntarily.
Who is hurt
Employers in states with existing paid leave mandates may find the credit less valuable, since state-required leave counts toward their leave offering but not toward the credit calculation, potentially limiting the credit's practical benefit. Federal taxpayers broadly, as making the credit permanent reduces federal revenue compared to its expiration. Competing businesses that do not offer paid leave and do not claim the credit may face a competitive disadvantage in attracting workers. Workers at employers who still choose not to offer paid leave would see no direct benefit, and the bill does not create a universal paid leave entitlement.
Supporters argue
Supporters argue that the current temporary credit — set to expire at the end of 2025 — creates uncertainty that discourages employers from building paid leave programs into their long-term business plans. They contend that making the credit permanent and expanding eligibility to employees with six months of tenure would extend coverage to millions of workers who currently lack access to paid leave, particularly at small businesses that cannot absorb leave costs without a subsidy. Supporters also point to research showing that paid leave reduces employee turnover and increases workforce participation, particularly among women and caregivers, producing broader economic benefits beyond the individual employer.
Opponents argue
Opponents argue that the credit is an inefficient use of federal revenue because it subsidizes leave that many large employers already provide voluntarily, directing tax benefits to companies that would have offered leave regardless. They contend that a permanent, open-ended tax credit without a universal coverage requirement leaves millions of workers — especially those at non-participating employers — without any guaranteed access to paid leave, making it a costly half-measure compared to a direct federal paid leave program. Critics also argue that the exclusion of state-mandated leave from the credit calculation creates administrative complexity and unequal treatment of employers across states.