How to Use the Employer Paid Family Leave Tax Credit Calculator
Section 45S of the tax code offers a federal tax credit to employers who voluntarily provide paid family and medical leave to their employees. To qualify, an employer must pay at least 50% of an employee's normal wages during leave. The credit rate starts at 12.5% at the 50% wage replacement threshold and rises by 0.25 percentage points for each additional point of wage replacement, reaching 25% at 100% pay.
Enter the wages paid during leave and the wage replacement rate you offer to see your credit rate and estimated tax credit. The credit applies to up to 12 weeks of leave per employee per tax year. Consult a tax professional and IRS Form 8994 for exact filing requirements.
Frequently Asked Questions
Section 45S is a federal tax credit for employers who voluntarily offer paid family and medical leave. The credit ranges from 12.5% to 25% of wages paid during leave, scaling up with the wage replacement rate offered.
Employers must pay at least 50% of the employee's normal wages during leave to qualify. The credit rate starts at 12.5% at the 50% threshold and increases by 0.25 percentage points for each point above 50%, up to 25% at 100% wage replacement.
Yes, the credit applies to up to 12 weeks of paid leave per employee per tax year.