Income tax; provide credit to employers offering paid maternity or paternity leave to employees.
The proposed tax credit would grant employers a credit equal to a minimum of 12.5% to a maximum of 25% of the wages paid to employees for their paid maternity or paternity leave, applicable for up to 12 weeks per taxable year. This scaling percentage incentivizes employers to provide a higher percentage of wages during leave. However, the aggregate tax credits allocated per calendar year would not exceed five million dollars, potentially limiting the number of businesses that could benefit from the legislation. Any unused tax credit could be carried forward for five consecutive years, allowing businesses to benefit over time.
Senate Bill 2965 aims to authorize an income tax credit for employers who provide paid maternity and paternity leave to their employees. The bill outlines specific eligibility criteria for the tax credit, with the intent of encouraging more employers to offer these benefits as part of their employment policies. It defines maternity and paternity leave as leave associated with pregnancy, childbirth, adoption, or foster placement, and it mandates that employers must have a written policy ensuring at least six weeks of paid leave for full-time employees and a proportionate amount for part-time employees. The policy must also ensure that employees receive at least 50% of their regular wages during this leave.
While the bill supports the provision of paid leave, which many advocates see as necessary for employee well-being and family support, there may be concerns regarding its financial implications for the state budget and the limits set on the total tax credits. Some may argue that the introduction of this tax incentive may not be sufficient to encourage smaller companies that struggle financially to provide such benefits. Therefore, the effectiveness of the bill in achieving its intended outcome relies on both the financial viability for employers and the overall economic context of the state.