The Treasury Department and IRS issued implementing guidance on the employer credit for paid family and medical leave under the One Big Beautiful Bill Act on Aug. 5, providing the regulatory framework for a tax incentive that could expand leave benefits to millions of American workers.
Notice 2026-28 clarifies eligibility requirements, wage calculation methods, and documentation standards for employers seeking to claim the credit against their federal tax liability, Treasury said.
The One Big Beautiful Bill Act permanently extended the paid family and medical leave employer tax credit, which had previously been a temporary provision subject to recurring congressional renewal, according to Treasury. The permanent status gives employers greater certainty to invest in leave benefit programs.
An estimated 75% of private-sector workers currently lack access to employer-provided paid family leave, according to Bureau of Labor Statistics data. The tax credit offers employers across all sectors a financial incentive to provide benefits that the majority of American workers do not currently receive.
Eligible employers who provide qualifying paid family and medical leave to employees may claim the credit, which offsets a portion of wages paid during leave periods. The guidance specifies minimum leave duration and wage replacement thresholds for credit eligibility.
The permanent credit represents the federal government’s most consequential intervention in paid leave policy in years. The United States remains one of the few developed nations without a federal paid family leave mandate, and the tax credit approach incentivizes rather than requires employer participation.
Business groups including the U.S. Chamber of Commerce and the Society for Human Resource Management have previously supported the credit as a market-based alternative to mandated leave requirements.