Fischer Applauds Release of Treasury, IRS Guidance on Her Permanent Paid Family and Medical Leave Tax Credit

Fischer's Paid Family and Medical Leave Tax Credit is first-ever nationwide leave policy enacted into law; Treasury Secretary recognizes Fischer for leadership

WASHINGTON - Today, U.S. Senator Deb Fischer (R-NE) issued the following statement upon the release of Internal Revenue Service (IRS) guidance for employers looking to claim the permanent Paid Family and Medical Leave Tax Credit she secured in the 2025 Working Families Tax Cuts.

Fischer's Paid Family and Medical Leave Tax Credit is the first-ever nationwide paid family leave policy enacted into law.

"The Paid Family and Medical Leave Tax Credit is a first of its kind policy that gives working families flexibility as they care for their loved ones," Fischer said. "The guidance released today gives employers the tools they need to take advantage of this credit and provide paid leave for their employees. Secretary Bessent has been a great partner in getting this done for hardworking Americans, and I thank him for his leadership."

"Hardworking Americans should not have to choose between caring for a loved one and earning a paycheck," Treasury Secretary Scott Bessent said. "The Working Families Tax Cuts permanently expands the federal Paid Family and Medical Leave Tax Credit, giving businesses, especially small businesses, greater incentives to provide paid leave so workers can care for a newborn or other family member or recover from a serious illness without sacrificing their financial security. I appreciate Senator Fischer's leadership to establish the nation's first federal Paid Family and Medical Leave policy and to secure its permanent expansion through the Working Families Tax Cuts. Today's guidance provides employers with the clarity they need to claim the enhanced credit, supporting American workers, families, and businesses."

"The permanent expansion of the credit encourages businesses to provide paid family and medical leave," IRS Chief Executive Officer Frank J. Bisignano said. "The changes enacted by the Working Families Tax Cuts will make more employers eligible for the credit and give them more ways to offer this benefit to their workers."

Treasury/IRS Guidance :

Beginning in 2026, more employers providing paid family and medical leave that meets certain requirements can take advantage of a general business tax credit ranging from 12.5% to 25% of wages paid to qualifying employees for up to 12 weeks of family and medical leave per taxable year.

Employers can claim the credit for premiums paid for PFML insurance policies, in addition to wages paid during PFML leave. To help employers apply the new premium-based method, Notice 2026-28 addresses how the premium-based method compares to the wage-based method, how to allocate the qualifying premiums, and how to elect between the premium method and the wage method. Forthcoming proposed regulations will provide broader guidance to address the statute comprehensively and provide certainty to taxpayers.

Background :

In President Trump's first term, Fischer secured the first and only nationwide Paid Family and Medical Leave policy by creating a temporary tax credit in the 2017 Tax Cuts and Jobs Act.

Last July, when Republicans were crafting the Working Families Tax Cuts, Fischer made the tax credit permanent.

The Working Families Tax Cuts also makes several key improvements to the credit, including:

• Expanded Eligibility: Employers can claim the credit for employees with six months of service and for part-time employees customarily working 20 hours or more per week.

• Expanded Coverage: Employers can claim the credit for insurance premiums paid to provide leave, or wages paid during leave.

• State and Local Mandates: Employers can count leave provided under state or local mandates toward the eligibility for this federal tax credit, but not toward the credit calculation.

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