From the IRS:

Eligible employers who provide paid family and medical leave to their employees may qualify for a new business credit for tax years 2018 and 2019.

In addition, eligible employers who set up qualifying paid family leave programs or amend existing programs by Dec 31, 2018, will be eligible to claim the employer credit for paid family and medical leave, retroactive to the beginning of the employer’s 2018 tax year, for qualifying leave already provided.

In Notice 2018-71, the IRS provided detailed guidance on the new credit in a Q&A format. The credit was enacted by the 2017 TCJA (Tax Cuts and Jobs Act).

The notice clarifies how to calculate the credit including the application of special rules and limitations. Only paid family and medical leave provided to employees whose prior-year compensation was at or below a certain amount qualify for the credit. Generally, for tax year 2018, the employee’s 2017 compensation from the employer must have been $72,000 or less.