Relief for Working Families Act
Bill: H.R.5231 | Sponsor: Rep. Kelly, Mike (R-PA)
Policy area: Taxation

Summary:
Relief for Working Families Act
This bill modifies the tax credit for employer-paid family and medical leave. Specifically, it extends the credit for a five-year period after an employer plan for payment of family and medical leave benefits is established. The bill also provides for an increased credit for plans established by certain small employers (i.e., employers with gross receipts not exceeding $25 million and 50 or fewer employees during the taxable year).

To amend the Internal Revenue Code of 1986 to modify the employer 
   credit for paid family and medical leave, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Relief for Working Families Act''.

SEC. 2. MODIFICATIONS TO EMPLOYER CREDIT FOR PAID FAMILY AND MEDICAL 
              LEAVE.

    (a) Credit Made Permanent and Limited to First 5 Years After 
Establishment of Plan.--
            (1) In general.--Section 45S(i) of the Internal Revenue 
        Code of 1986 is amended to read as follows:
            (2) Phase-out.--Section 45S of such Code is amended by 
        adding at the end the following new subsection:
    ``(i) Credit Limited to First 5 Years After Establishment of 
Plan.--
            ``(1) In general.--No credit shall be allowed under this 
        section with respect to any taxpayer after the 5-taxable-year 
        period beginning with the taxable year which includes the date 
        on which the taxpayer first has in place a policy described in 
        subsection (c)(1).
            ``(2) Phase-down of credit.--The credit determined under 
        this section (without regard to this subsection) shall be 
        reduced by--
                    ``(A) in the case of the fourth taxable year in the 
                5-taxable-year period described in paragraph (1), 25 
                percent of the amount of such credit, and
                    ``(B) in the case of the fifth taxable year in such 
                5-taxable-year period, 50 percent of the amount of such 
                credit.
            ``(3) Transitional rule.--The 5-taxable-year period 
        described in paragraph (1) shall not be treated as beginning 
        before the beginning of the taxpayer's first taxable year 
        beginning after December 31, 2022.''.
    (b) Enhanced Credit for New Plans of Small Employers.--
            (1) In general.--Section 45S of such Code is amended by 
        adding at the end the following new subsection:
    ``(j) Enhanced Credit for Certain New Plans of Small Employers.--
            ``(1) In general.--In the case of an eligible small 
        employer--
                    ``(A) subsection (a)(2) shall be applied--
                            ``(i) by substituting `25 percent' for 
                        `12.5 percent', and
                            ``(ii) by substituting `50 percent' for `25 
                        percent' (determined without regard to the 
                        substitution described in clause (i)),
                    ``(B) the credit determined under subsection (a)(1) 
                for any taxable year shall be increased by the 
                applicable percentage (determined after application of 
                subparagraph (A)) of the sum of--
                            ``(i) so much of the amounts paid during 
                        such taxable year as administrative expenses of 
                        carrying out the policy described in subsection 
                        (c)(1) (other than any amounts paid to 
                        establish such policy), including payments to 
                        third-party administrators and premiums for 
                        short-term disability insurance, as do not 
                        exceed $50,000, plus
                            ``(ii) in the case of the taxable year 
                        which includes the date on which the policy 
                        described in subsection (c)(1) takes effect, so 
                        much of the amounts paid to establish such 
                        policy as do not exceed $1,000.
            ``(2) Eligible small employer.--For purposes of this 
        subsection, the term `eligible small employer' means, with 
        respect to any taxable year, any eligible employer--
                    ``(A) the gross receipts of which for such taxable 
                year do not exceed $25,000,000,
                    ``(B) which employed on average 50 or fewer 
                employees on business days during the taxable year, and
                    ``(C) which did not have a policy described in 
                subsection (c)(1) in place at any time prior to the 
                date of the enactment of this Act.''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to taxable years beginning after the date of the 
        enactment of this Act.
    (c) Employer Requirements for Rate of Payment.--
            (1) In general.--Subsection (c) of section 45S of such Code 
        is amended--
                    (A) in paragraph (1)(B), by inserting after the 
                first sentence the following: ``For purposes of 
                determining the rate of payment under the program, any 
                family and medical leave which is paid by a State or 
                local government or required by State or local law, 
                determined as a percentage of the wages normally paid 
                to such employee for services performed for the 
                employer, shall be taken into account.''; and
                    (B) in paragraph (4)--
                            (i) by striking ``For purposes of this 
                        section, any'' and inserting ``Any''; and
                            (ii) by striking ``amount of paid family 
                        and medical leave provided by the employer'' 
                        and inserting ``wages taken into account under 
                        subsection (a)''.
            (2) Effective date.--The amendments made by this subsection 
        shall take effect as if included in section 13403 of Public Law 
        115-97.
    (d) Technical Corrections.--
            (1) In general.--Section 45S of such Code is amended--
                    (A) in subsection (b)(1), by striking ``credit 
                allowed'' and inserting ``wages taken into account'';
                    (B) in subsection (c), by striking paragraph (3) 
                and inserting the following:
            ``(3) Aggregation rule.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), all persons which are treated as a 
                single employer under subsections (b) and (c) of 
                section 414 shall be treated as a single employer.
                    ``(B) Exception.--
                            ``(i) In general.--Subparagraph (A) shall 
                        not apply to any person who establishes to the 
                        satisfaction of the Secretary that such person 
                        has a substantial and legitimate business 
                        reason for failing to provide a written policy 
                        described in paragraph (1) or (2).
                            ``(ii) Substantial and legitimate business 
                        reason.--For purposes of clause (i), the term 
                        `substantial and legitimate business reason' 
                        shall not include the operation of a separate 
                        line of business, the rate of wages or category 
                        of jobs for employees (or any similar basis), 
                        or the application of State or local laws 
                        relating to family and medical leave, but may 
                        include the grouping of employees of a common 
                        law employer.''; and
                    (C) in subsection (d)(2), by inserting ``, as 
                determined on an annualized basis (pro-rata for part-
                time employees),'' after ``compensation''.
            (2) Effective date.--The amendments made by this subsection 
        shall take effect as if included in section 13403 of Public Law 
        115-97.
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