On January 29, 2024, Senators Deb Fischer (R-NE) and Angus King (I-ME) proposed crucial reforms to the 45S Employer Credit for Paid Family and Medical Leave (45S) that would make the credit more durable and help businesses provide paid leave benefits to more workers. Originally enacted in the 2017 Tax Cuts and Jobs Act, the bipartisan 45S tax credit was the first federal policy to support paid family and medical leave in the United States.
Amid an ever-changing economy and tight labor market, paid family and medical leave can importantly encourage workers to stay in the labor force, support household finances, and help businesses compete for workers. A 2023 BPC-Artemis poll found that many prime-age adults (defined here as those aged 20-54 who are not full-time students) are not currently in the workforce due to caregiving responsibilities, especially women. Moreover, when compared to a wide range of potential workplace benefits, prime-age adults who are not in the labor force say that paid family and medical leave is about as important as compensation when considering starting or returning to the workforce.
As momentum grows to find innovative federal and state solutions to offer paid family and medical leave, enhancing the 45S tax credit is a critical next step to expand access to employer-provided paid family leave benefits. Enhancing the 45S tax credit by making it permanent, allowing employers to apply it toward insurance premiums, and expanding the base of eligible workers could further help more employers provide paid leave to hardworking American families.
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