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Trump Expands Family, Medical Leave Benefits: Here's Who Can Get It
0 Share Newsweek is a Trust Project member See more of our trusted coverage when you search. Prefer Newsweek on Google to see more of our trusted coverage when you search. The Trump administration has announced new guidance expanding a federal tax credit designed to encourage employers to offer paid family and medical leave, potentially making the benefit available to more workers across the country.
The changes, issued by the Treasury Department and Internal Revenue Service ( IRS ), permanently expand and update the employer tax credit for paid family and medical leave under the Working Families Tax Cuts law.
The move comes as the administration seeks to increase access to paid leave through tax incentives for businesses rather than a federal mandate. Reuters reported that the United States remains the only member of the Organization for Economic Cooperation and Development (OECD) without a national requirement for paid family and medical leave.
Family medical leave refers to a job-protected period of absence that allows eligible employees to take time away from work for certain family or medical reasons without losing their position. In the United States, the primary federal law governing this benefit is the Family and Medical Leave Act (FMLA), which grants eligible workers up to 12 weeks of unpaid leave in a 12-month period.
Employees may qualify for FMLA leave for several reasons, including the birth or adoption of a child, caring for a spouse, child or parent with a serious health condition, or dealing with their own serious medical condition that prevents them from working. Certain military family circumstances may also qualify. During approved leave, employers must generally maintain the employee's group health insurance coverage under the same terms as if they had continued working.
Not all workers are eligible for FMLA protections. To qualify under the original guidelines, employees typically must have worked for their employer for at least 12 months, logged at least 1,250 hours during the previous year and work for a covered employer. Some states have expanded family and medical leave programs that provide paid benefits, offering additional protections beyond federal law.
The updated policy doesn’t create a new federal paid leave program that workers apply for directly. Instead, it provides enhanced tax incentives to employers that offer paid family and medical leave benefits to employees.
Under the expanded program, eligible employers can receive a federal tax credit worth between 12.5 percent and 25 percent of qualifying wages paid to employees taking family or medical leave, for up to 12 weeks per year.
Beginning in 2026, employers can also claim the credit for premiums paid for qualifying paid family and medical leave insurance policies.
Treasury Secretary Scott Bessent said the changes are intended to help workers care for loved ones or recover from illness without sacrificing financial security, saying, “hardworking Americans should not have to choose between caring for a loved one and earning a paycheck.”
The beneficiaries of the expanded credit are employers, but the changes could increase access to paid leave for workers whose employers choose to participate.
Several eligibility rules have been broadened. Under the new guidance:
The credit applies only when employers choose to offer qualifying paid family and medical leave programs. Workers whose employers do not offer such benefits would not automatically receive paid leave through the federal government.
Workers can’t apply to the IRS for these benefits themselves. Instead, they’d need to determine whether their employer offers a paid family and medical leave program that qualifies under federal rules.
Employees seeking to take leave should check with their HR department or benefits administrator to learn:
Employers that meet the program's requirements can claim the tax credit through their federal tax filings. IRS Chief Executive Officer Frank J. Bisignano said that "the changes enacted by the Working Families Tax Cuts will make more employers eligible for the credit and give them more ways to offer this benefit to their workers."
The IRS has issued Notice 2026-28 explaining how businesses can use either the wage-based method or the new premium-based method when calculating the credit.
The Treasury Department and IRS said they plan to issue additional proposed regulations to provide broader guidance for employers. The agencies are also accepting public comments on implementation of the expanded credit.
Supporters argue the changes will encourage more businesses, particularly small businesses, to offer paid family and medical leave by lowering the cost of providing the benefit.
Critics, however, note that the policy remains voluntary and stops short of creating a nationwide paid leave entitlement for workers.
For workers, the practical impact will depend largely on whether their employers decide to take advantage of the newly expanded tax incentives and offer qualifying paid leave benefits.
Contact Newsweek editors on this story: John Fitzpatrick and Gray R. Thomas
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