What’s on the Table? A Review of Federal Paid Family Leave Proposals

For many years, the government, private sector, and policy community have worked to develop and implement innovative paid family leave solutions. Most recently, the House Bipartisan Paid Family Leave Working Group released two discussion drafts to advance paid leave policy: 

1. The Interstate Paid Family Leave Action Network (IPLAN) Act which promotes state collaboration to align administrative and statutory policies and share best practices.
2. The Paid Family Leave Public-Private Partnerships Act which incentivizes states to establish paid family leave programs using a public-private partnership model. 

These proposals represent the latest effort to advance federal paid family leave policy. They follow years of bipartisan work and present an opportunity to revisit and reintroduce complementary ideas developed over the past decade. In this blog, we highlight several such proposals that remain relevant today and could form part of a broader federal solution. 

 Reviewing the Menu of Paid Family Leave Options 

There are many existing proposals to expand paid family leave, which vary in their cost, administration, and effectiveness. There are five broad categories of proposals:  

1. Creating a new social insurance program. 
2. Reforming existing social insurance programs. 
3. Expanding or reforming the Child Tax Credit. 
4. Providing tax credits to businesses.
5. Expanding flexible leave options.

1. Creating a new social insurance program 

Historically, most public paid family leave proposals have been a form of social insurance, wherein eligible workers and employers are required to pay into the program and can access its benefits. 

The Democratic FAMILY Act is the longest-standing federal proposal for paid leave reform. It would create a new social insurance program, providing 12 weeks of paid family and medical leave alongside the framework of the 1993 Family and Medical Leave Act (FMLA). Benefits would be paid for by increasing payroll taxes, akin to how unemployment insurance or other insurance programs are funded. It would be run through the Social Security Administration. 

A version of this reform was included in President Biden’s Build Back Better agenda, though its duration was later reduced to four weeks. The legislation ultimately failed to become law. Thirteen states and the District of Columbia offer public paid family leave programs – all of which have been set up and implemented using a social insurance model.  

In 2017, the AEI-Brookings Working Group on Paid Leave put forward a consensus compromise plan for a federal parental leave policy that would allow working parents to take eight weeks of paid time off while receiving 70 percent of their wages, up to a limit. They recommended financing the leave through an employee payroll tax, as well as cuts in spending that were not directed at low-income taxpayers. 

In 2024, the Convergence Collaborative on Supports for Working Families put forward a bipartisan proposal for paid parental leave. The Collaborative proposed a stand-alone 12-week paid parental leave policy funded at the federal level with adequate wage replacement and available to each parent. Its goal was to protect families from economic hardship, support parental caregiving, and benefit the infant or adopted child. This would also take the form of social insurance. 

2. Reforming existing social insurance programs 

Other proposals have centered around reforms to existing social insurance programs. Several Republican bills have proposed allowing parents to ‘pull forward’ from their own Social Security benefits later in life to provide payment for time out of work following the birth or adoption of a child. These proposals aim to avoid new federal spending, but the trade-off is a reduction in retirement income for participating individuals—and potential implications for the broader Social Security system depending on how benefits are structured.  

Presidents from both political parties have explored using unemployment insurance as a vehicle for paid parental leave, first proposed by President Clinton as “baby UI.” In his first term, President Trump put forward a proposal for 6 weeks of paid parental leave, run through the UI system. Multiple scholars and organizations have continued analyzing this approach. In 2022, the Niskanen Center published a report about how using UI for paid leave requires changing the rules governing how states can finance their programs.  

3. Expanding or reforming the Child Tax Credit 

More recent proposals have centered around reforms to the Child Tax Credit (CTC), the largest federal tax credit that goes to families. For example, senator Bill Cassidy (R-LA) and former senator Kyrsten Sinema (I-AZ) proposed bipartisan legislation that would shift $5,000 Child Tax Credit payments forward for younger children, which could be used by new parents to help cover an extended absence from work. The proposal is a relatively low cost solution to providing assistance to families and allows them flexibility to determine how they want to receive the tax benefit.  

Former Vice President Harris, as well as current Vice President Vance, have proposed a ‘baby bonus,’ or a larger CTC payment in the first year of a child’s life. Harris proposed $6,000, whereas Vance has proposed $5,000. Representative Blake Moore has introduced, in the current Congress, the Family First Act which would provide a $2,800 CTC payment to pregnant mothers, which could be used to offset lost wages for taking unpaid leave during pregnancy or postpartum. 

There has been criticism that an enhanced CTC with larger, targeted support for young children is insufficient on its own, as it does not guarantee time off or provide job protection for those who take leave. Multiple scholars and organizations have pairing CTC expansion with FMLA reform to ensure both job-protected unpaid leave and additional financial support for new parents. This could involve providing a larger CTC payment during pregnancy and/or the first year of a child’s life, alongside expanded FMLA coverage specific to the postpartum period. 

4. Providing tax credits to businesses 

Others have proposed enhancing tax credits to businesses as a way to offset the costs of providing paid leave. The 2017 Tax Cuts and Jobs Act introduced the first national paid family and medical leave policy through the 45S Employer Credit for Paid Family and Medical Leave. This credit allows businesses to offset part of the cost of wages paid to employees on qualifying family or medical leave. To build on this progress, senators Deb Fischer (R-NE) and Angus King (I-ME) have proposed reforms to this tax credit, including making it permanent and establishing outreach efforts to increase employer awareness and participation. 

5. Expanding flexible leave options   

The Republican Working Families Flexibility Act would allow private employers to offer compensatory time off in lieu of overtime pay, at a rate of 1.5 hours for every hour of overtime worked. This accrued time could then be used to cover family or medical needs. The effectiveness of this approach in expanding access to paid family leave remains unclear. 

Conclusion  

The ability to care for newborns and other loved ones is too important to be left up to individual companies or states alone. This is why federal paid family leave policy is required to ensure that all Americans have access to this basic protection for parents and children.  

Fortunately, Congress does not need to start from scratch. With new bills on the horizon and a history of bipartisan innovation to draw from, lawmakers have a robust toolkit of ideas ready to be adapted, revived, or built upon. As momentum builds, the 119th Congress has an opportunity to prioritize this critical issue and deliver meaningful reform for American families.