On August 5, 2026, the Treasury Department and IRS issued Notice 2026-28, clarifying One Big Beautiful Bill Act (OBBBA) changes to the employer tax credit for paid family and medical leave (PFML), effective for taxable years beginning after December 31, 2025.
Background
Section 45S provides employers with a tax credit for certain paid family and medical leave expenses. The OBBBA made the credit permanent and expanded it to include eligible PFML insurance premiums, while extending eligibility to employees with six months of service who work at least 20 hours per week. Employers must provide at least two weeks of PFML; state- or locally mandated leave may count toward eligibility, but not the credit amount.
Notice 2026-28
New guidance clarifies how employers can claim the PFML insurance premium credit, including how it compares with the wage-based method, how to allocate blended premiums, and how to choose between methods. Only premiums covering eligible leave and qualified employees count; allocations must use a reasonable, documented method consistent with policy terms.
Upcoming Regulations
The Treasury Department and IRS plan to incorporate this guidance into proposed regulations, but taxpayers may rely on the notice in the meantime. Comments are due by October 16, 2026. Download the bulletin for more details.
