The IRS Just Made The Paid Leave Credit A Permanent Planning Item

Treasury and the IRS issued Notice 2026-28 on the permanent expansion of the employer credit for paid family and medical leave under the Working Families Tax Cuts. The guidance keeps Section 45S in the conversation for employers that offer qualifying paid leave, and it gives CPA firms a fresh reason to review policies before year-end planning turns into year-end cleanup.

The credit is not just a tax form line. It depends on written leave policy, payroll support, eligibility details, and records that clients may not have kept clean when the benefit still felt temporary.

Permanent Means Firms Need A Repeatable Review

When a credit becomes permanent, it moves from one-off analysis to recurring workflow. CPAs should expect more employers to ask whether their paid leave benefits qualify, how the credit interacts with wage costs, and what documentation has to be retained to support the claim.

That creates a practical planning opportunity. Firms can build the review around three questions: does the employer have a written policy, does payroll data identify qualifying leave clearly, and can the company support the credit calculation without reconstructing records after filing season begins?

The Documentation Gap Is The Real Risk

Paid leave benefits often live across HR, payroll, and finance systems. A client may know employees were paid during leave, but still lack a clean policy file, eligibility trail, or wage detail that ties neatly to the credit.

That is where CPA firms can add value before the return is drafted. A pre-close check can identify missing policy language, inconsistent payroll coding, or leave categories that do not line up with the credit rules.

What CPAs Should Ask Clients Now

Employers should be asked whether they changed paid leave policies for 2026, whether payroll systems separately track family and medical leave wages, and whether HR has retained the policy documents that support eligibility.

For advisory firms, the timing matters. Raising those questions in August gives clients time to clean up records and adjust procedures before the credit becomes another filing-season scramble.