On August 5, 2026, the US Department of the Treasury and the Internal Revenue Service issued Notice 2026-28, providing guidance on the permanent expansion of the employer credit for paid family and medical leave under the “Working Families Tax Cuts” enacted as part of the Trump administration’s tax package.
Beginning in 2026, the credit — previously a temporary Section 45S provision — becomes a permanent feature of the Internal Revenue Code, and eligible employers can claim it for wages paid to qualifying employees during periods of family or medical leave and, at the employer’s election, for a portion of insurance premiums paid to fund such leave.
The credit ranges from 12.5% to 25% of wages (or premiums), scales with the percentage of the employee’s regular wages that are replaced during leave, and applies for up to 12 weeks of leave per employee per year.
The notice also expands eligibility by lowering the minimum employee-service requirement to six months and clarifies interactions with state and local paid-leave mandates.
Employers, including those with US operations of Brazilian or Portuguese groups, should revisit their leave policies and payroll systems before year-end to capture the credit and align documentation with the new guidance.
Source: Internal Revenue Service