Paid Family and Medical Leave Tax Credit Extension and Enhancement Act

This bill, titled the "Paid Family and Medical Leave Tax Credit Extension and Enhancement Act," significantly enhances the existing paid family and medical leave tax credit under Section 45S of the Internal Revenue Code. Employers will now have the option to calculate this credit based on either the wages paid to qualifying employees while on family and medical leave or the total premiums paid for an insurance policy that provides such leave. This new insurance-based calculation allows the rate of payment to be determined without regard to whether any employees actually took leave during the taxable year.

The legislation refines the definition of a qualifying employee, requiring customary employment for at least 20 hours per week and allowing employers to elect a minimum employment period of six months. It clarifies that while leave mandated or paid by state or local governments counts towards an employer's provision of leave, it does not count towards the federal tax credit amount, preventing a double benefit. To prevent duplicate tax advantages, the bill explicitly states that no deduction is allowed for wages or insurance premiums used to claim this credit. Finally, the bill mandates extensive outreach efforts by the Small Business Administration and the Internal Revenue Service to inform employers about the enhanced credit's availability and requirements.