--- title: OBBBA Permanently Expands Employer Tax Credit for Paid Family and Medical Leave description: The “One Big Beautiful Bill Act” makes the employer tax credit for paid family and medical leave (PFML) permanent and expands it to cover PFML image: https://blog.nisbenefits.com/hubfs/blog-headers/pfml-tax-credit-b.jpg --- ![notebook on desk that reads tax credit](https://blog.nisbenefits.com/hubfs/blog-headers/pfml-tax-credit-b.jpg) # OBBBA Permanently Expands Employer Tax Credit for Paid Family and Medical Leave - Home - [Employee Benefit News for School, City and County Employers](https://blog.nisbenefits.com) - OBBBA Permanently Expands Employer Tax Credit for Paid Family and Medical Leave [ Erin Woulfe ](https://blog.nisbenefits.com/author/erin-woulfe) 07/16/2025 [ Health Insurance Solutions](https://blog.nisbenefits.com/topic/health-insurance-solutions), [ Ancillary Benefits](https://blog.nisbenefits.com/topic/ancillary-benefits), [ Legislative News](https://blog.nisbenefits.com/topic/aca-other-legislative-news), [ The Administrator's Corner](https://blog.nisbenefits.com/topic/the-administrators-corner) [0 Comments ](https://blog.nisbenefits.com/employer-tax-credit-pfml-expanded#postComment) 1 Minutes The budget bill signed on July 4, known as the “[One Big Beautiful Bill Act](https://www.congress.gov/bill/119th-congress/house-bill/1/text/eas)” (OBBBA), permanently extends the employer tax credit for paid family and medical leave (PFML). It also expands eligibility to include PFML insurance premiums and leave taken by newer employees, effective for tax years beginning after December 31, 2025.   ## **Background: PFML Tax Credit** The PFML tax credit, introduced in 2017, offered employers a percentage of wages paid to qualifying employees on family and medical leave through December 31, 2025. Employers qualified by offering at least two weeks of paid family and medical leave at 50% or more of regular pay. The credit excluded leave required by law and standard time off.   ## **OBBBA Amendments ** The OBBBA makes the PFML tax credit permanent by eliminating its 2025 expiration. It allows the tax credit for both wages and PFML insurance premiums, even if employees don’t use the leave. States now permit insurance carriers to offer voluntary PFML coverage for employers. It also provides an exception to the requirement that employers must have a written PFML policy with specific provisions. Under this new rule, employers with a substantial and legitimate business reason for not having such a policy may still qualify for the credit. Additionally, the eligibility threshold for employee tenure has been reduced from one year to six months. Another amendment limits the credit to leave taken by employees who work at least 20 hours per week. These changes apply to tax years beginning after December 31, 2025.   ## **Next Steps** Employers offering voluntary PFML should review the new amendments to see if they qualify for this tax credit. Download the [bulletin](https://blog.nisbenefits.com/hubfs/blog-supporting-docs/bulletin-permanent-er-tax-credit-pfml.pdf) for more details. 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