In Notice 2026-28, the IRS and Treasury provide guidance on the employer tax credit for providing paid family and medical leave. The guidance modifies Notice 2018-71, focusing on the premium method for calculating the tax credit. It uses a question-and-answer format.

The Notice states that if any portion of the premium paid to fund a paid leave benefit is not eligible for the credit under the wage method of calculating it, that portion is not eligible when using the premium method for calculating the tax credit. The Notice also covers rules regarding eligibility of the type of paid benefit and the recipient (worker) receiving the paid benefit. In addition, the guidance specifies that an employer can use both the wage and the premium methods for calculating the tax credit for different kinds of paid leave.

Prospects: Notice 2026-28 also announces “forthcoming proposed regulations.” However, it does not provide a timeline for when the proposed new regulations will be released. But it does say that the proposed new regulations will likely be consistent with this Notice, and that its rules will be applied prospectively.

NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org