New Win for Workers: Updated Paid Family & Medical Leave Tax Credit Starts in 2026
- Author: Wilbert Raynor
- Posted: 2025-11-28
A major update in the One Big Beautiful Bill Act will make it easier for millions of workers, especially family caregivers, to get paid time off starting in 2026.
The law expands and makes permanent the Paid Family and Medical Leave (PFML) Tax Credit, which encourages businesses to offer paid leave by giving them a federal tax break.
What the Credit Does
Employers can claim a tax credit when they provide:
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At least two weeks of paid family or medical leave
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At least 50% of a worker’s usual pay during leave
Who Qualifies
Workers who:
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Have been employed 6 months
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Work 20+ hours per week
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Earn under $93,000 a year (based on 2025 limits)
How Much Is the Credit?
Employers receive:
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12.5% credit if they pay 50% of wages
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Up to 25% credit if they pay full wages
Covers up to 12 weeks per employee per year.
What Paid Leave Can Be Used For
Workers can take paid leave to:
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Recover from a health condition
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Care for a spouse, child, or parent
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Welcome a new baby or adopted child
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Support a service member
When It Starts
All updates take effect for the 2026 tax year.
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