The Department of the Treasury and the Internal Revenue Service have issued official guidance on an expanded employer tax credit for paid family and medical leave (PFML), according to an announcement from the two agencies. The guidance, published as Notice 2026-28, addresses changes made under legislation called the Working Families Tax Cuts (WFTC).
Paid Family and Medical Leave Tax Credit Becomes Permanent
According to the official announcement, the Working Families Tax Cuts makes permanent the employer credit for paid family and medical leave and expands eligibility and coverage for employers who offer PFML benefits to their employees. Previously, the credit had been temporary in nature.
Treasury Secretary Scott Bessent stated in the announcement that the permanent expansion gives businesses — particularly small businesses — greater incentives to provide paid leave so workers can care for a newborn, other family member, or recover from a serious illness without sacrificing their financial security. IRS Chief Executive Officer Frank J. Bisignano noted that the changes encourage businesses to provide paid family and medical leave benefits.
The guidance in Notice 2026-28 is intended to provide employers with clarity on how to claim the enhanced credit under the new permanent rules. The announcement indicates the changes affect both the scope of employers who may be eligible and the coverage provisions related to the credit.
Employers Should Review the New IRS Guidance Before Claiming the Credit
The credit is relevant to employers across business sizes, with the announcement specifically highlighting potential benefits for small businesses. Workers who receive paid family and medical leave through qualifying employer programs may indirectly benefit if the credit encourages more employers to offer such leave.
Employers and tax professionals seeking to understand how the expanded credit applies to their specific situations should review Notice 2026-28 directly on the IRS website or consult with a qualified tax advisor, as the details of eligibility and compliance requirements may vary by circumstance. Readers are encouraged to verify their specific situation with the IRS or a tax professional, as this announcement provides general guidance and individual circumstances may differ.
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