Paid Family and Medical Leave Tax Credit Extension and Enhancement Act

This bill amends the Internal Revenue Code to enhance the paid family and medical leave tax credit for employers. It allows employers to claim a credit based on either wages paid to employees on leave or premiums paid for an insurance policy covering such leave, and extends outreach efforts to promote the credit.

Sec. 2, Enhancement of paid family and medical leave credit: The bill modifies the existing credit to let employers choose between a credit based on wages paid to employees on family and medical leave or a credit based on premiums paid for an insurance policy covering such leave. The rate for the insurance option is determined without regard to whether leave was actually taken. It also changes the aggregation rule for related employers, allowing exceptions for substantial and legitimate business reasons, and clarifies that state or local government-mandated or paid leave is counted for determining leave provided but not for the credit amount. The definition of a qualifying employee is expanded to include those employed for at least 6 months (instead of 1 year) and those customarily working at least 20 hours per week. The bill also removes a previous subsection (i).

Sec. 2(b), No double benefit: The bill adjusts the tax code to prevent double benefits by disallowing deductions for wages or premiums that are also used to claim the credit.

Sec. 2(c), Outreach: The Small Business Administration and its resource partners, as well as the Internal Revenue Service, are directed to conduct targeted outreach to employers about the credit, including providing education, training, and assistance in developing written paid leave policies.

Sec. 2(d), Effective date: The changes apply to taxable years beginning after the date the bill is enacted.