There was a new credit available to some employers starting back in 2018.  If your company has a written plan to provide paid time off to employees while they are on family or medical leave, you could be eligible for a credit for a percentage of the wages paid to them during this time off.

The plan must meet certain requirements, which include the length of time this benefit must last, a minimum amount the employee must be paid during the time off, how long the employee has been working for the company, and the maximum salary of the employees that qualify for the credit. 

The credit is a percentage of the amount of wages paid to the qualifying employees while on family or medical leave for up to 12 weeks per taxable year.  The range is between 12.5% – 25%, depending on what percentage of the employee’s wages are paid during this time off.  For example, if the plan provides for payment of 50% of the employee’s normal wages and all other requirements are met, the employer is eligible for a 12.5% credit on the amount paid to the employee while on leave.  If the full normal wages are paid, then the credit would be 25%.

Other restrictions and requirements exist.  Make sure your payroll provider and tax consultant are aware of your plan along with any employees that are taking leave so this information can be tracked and your company can realize any benefits available.  If you need assistance with formalizing or adopting a plan or would like to discuss how your company can take advantage of this, please contact us.

Amy Van Buren is a shareholder in the firm’s Wealth Management Services Team at LBMC, a premier Tennessee-based professional services firm headquartered in Brentwood. This team focuses on wealth transfer and protection strategies along with providing tax planning and compliance services for high net wealth families. She can be reached at or 615.309.2291.

LBMC tax tips are provided as an informational and educational service for clients and friends of the firm. The communication is high-level and should not be considered as legal or tax advice to take any specific action. Individuals should consult with their personal tax or legal advisors before making any tax or legal-related decisions. In addition, the information and data presented are based on sources believed to be reliable, but we do not guarantee their accuracy or completeness. The information is current as of the date indicated and is subject to change without notice.