Certain Employers May Be Eligible for a Tax Credit for Providing Paid Adoption Leave

Beginning on Jan. 1, 2023, certain Michigan employers who voluntarily provide paid adoption leave to employees may claim a tax credit, of up to $4,000 per qualified employee.

Who is a qualified employer?

According to House Bill 6070, recently signed into law by Governor Whitmer, a qualified employer is one that provides at least two weeks of paid adoption leave for full- and part-time employees. In addition, the employer must have a written policy offering adoption leave that satisfies the following:

  • The policy provides at least two weeks of paid adoption leave for each full-time qualifying employee and a proportionate amount of adoption leave for each part-time qualifying employee; and
  • The rate of payment for adoption leave is at least 50 percent of the wage normally paid to that same employee for services performed for the employee.

Who is a qualified employee?

In general, an employee is qualified when he or she has been employed for at least one year. Additional rules apply under the law.

What is adoption leave?

Adoption leave is a period of absence related to an adoption of a child by the employee to provide time for bonding and adjustments immediately after the placement of that child with the employee.

How much is the qualified employer able to claim per qualified worker?

A qualified employer that voluntarily provides paid adoption leave to its employees may claim a tax credit in an amount equal to 50% of the employee’s wages paid during the tax year in which he or she is on leave, or $4,000 per qualified employee, whichever is less.

House Bill 6070 is part of a greater bill package created to increase protections for foster youth and remove barriers for families interested in adopting or fostering a child.

Help is available

The attorneys at O’Reilly Rancilio are available to answer your questions regarding the new law. For more information, please call 586-726-1000 or visit our website.

Categories: Business, Family Law