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A Paid Family Leave Tax Credit Calculator: Paid Leave Can Contribute to an Employer’s Bottom Line

Rarely do human resources professionals and employment lawyers contribute to an employer’s bottom line. But the new federal tax credit for employer-provided paid family and medical leave offers a unique opportunity to do just that and help reduce your company’s tax liability. The recently-enacted Tax Cuts and Jobs Act provides a tax credit to employers that voluntary offer paid family and medical leave. Our Jackson Lewis colleagues in the Benefit Law practice group recently summarized this new law. We have taken it a step further and created a Paid Leave Tax Credit Calculator for employers to quickly estimate the potential tax savings their voluntary paid leave programs can generate. Remember that this law provides a tax credit; that means it’s a dollar-for-dollar reduction in the company’s income tax obligation.

Follow these 4 steps to determine if your company can take advantage of the paid family leave tax credit. No employer is too big or too small to receive this tax credit – employers of all sizes are eligible!

Step 1: look at the company’s existing policies that include voluntary pay benefits (i.e., pay that is not required by law), such as a salary continuation disability policy or a parental leave policy. Stated another way, do you provide paid time off for any of the following leave reasons? If so move to Step 2.

  • Employee serious health condition, including pregnancy
  • Parental leave/bonding leave
  • Care of a family member with a serious health condition
  • Care of an injured service member
  • Because of a qualifying exigency that arises when a family member is deployed abroad on active military duty

Step 2: Gather or estimate your company’s 2017 income replacement dollar amount that was used to pay out under one or all of the above-mentioned policies to use as an estimate for calculating a 2018 tax credit.

Step 3: Plug the pay information into Jackson Lewis’s handy Estimated Paid Leave Tax Credit Calculator.

Step 4: If the estimated calculation indicates a positive amount, contact a Jackson Lewis attorney to review your policy to ensure it complies with the tax credit for paid family and medical leave. If you don’t have a policy but have contemplated offering enhanced benefits to your workforce, such as paid parental leave, now is the time! Remember that this is a tax credit, that means it’s a dollar-for-dollar reduction in the company’s income tax obligation, so it’s worth looking into in order to take advantage of potential tax savings the company’s voluntary paid leave program can generate.

Jackson Lewis P.C. © 2018


About this Author

Megan Holstein Health Management Lawyer Jackson Lewis

Megan Holstein is a Principal in the Denver, Colorado, office of Jackson Lewis P.C. Her practice focuses on disability, leave of absence, workplace accommodations and health management issues.

Ms. Holstein advises and represents employers regarding disability, paid sick and family leave, and accommodation administration, compliance audits, policies, training, and health management issues. She has extensive experience focusing on the Family and Medical Leave Act, the Americans with Disabilities Act, and their state law...