Form 8994: The Employer Credit for Paid Family and Medical Leave
Published November 8, 2026
Form 8994 is used to figure the employer credit for paid family and medical leave. The credit ranges from 12.5% to 25% of certain wages paid to a qualifying employee while that employee is on family and medical leave.
This post is general information from the IRS form and its instructions. It does not say whether a particular employer meets the policy rules, and it does not give tax advice for a particular business.
Who files the form
Partnerships and S corporations must file Form 8994. Other taxpayers do not file it if their only source of the credit is a partnership or S corporation. Those taxpayers report the credit directly on Part III, line 4j, of Form 3800, General Business Credit.
The instructions also say that a taxpayer may claim the credit, or choose not to claim it, within 3 years from the due date of the return. That choice can be made on an original return or an amended return.
The four yes-or-no questions
The form starts with questions A through D. Each question asks about the employer's written policy or the leave paid during the year. If any answer is no, the form says to stop and not file it. The instructions describe an exception that may apply to a partnership or S corporation.
Question A asks whether the written policy provides at least 2 weeks of paid family and medical leave each year. Question B asks whether the policy pays at least 50% of the wages normally paid. Question C asks whether leave was paid to at least one qualifying employee during the year. Question D asks about non-interference language for a qualifying employee who is not covered by the Family and Medical Leave Act.
The written policy
The policy can be one document or several documents. The instructions say the policy must be in place before the leave it covers is paid. It is treated as in place on the later of its adoption date or its effective date.
The instructions give an example. A policy adopted on June 15, 2024, with an effective date of July 1, 2024, can cover leave taken on or after July 1, 2024. The example assumes all other requirements are met.
The policy may not exclude a classification of employees that is qualifying. For example, it may not leave out collectively bargained employees if they are qualifying employees.
Lines 1 through 3
Line 1 is the total paid family and medical leave credit figured for wages paid during the year to qualifying employees while they were on leave. If you use the Paid Family and Medical Leave Credit Worksheet, use the total from column (d). Line 1 also refers to an adjustment to the deduction for salaries and wages.
Line 2 is the employer credit from partnerships and S corporations. Line 3 adds lines 1 and 2. Partnerships and S corporations report line 3 on Schedule K. All other taxpayers report it on Form 3800, Part III, line 4j.
Limits on the credit
The instructions limit the leave counted for the credit to 12 weeks in any tax year. The applicable percentage starts at 12.5% when the rate of payment is 50%. It rises as the rate of payment goes higher, up to a maximum of 25%.
Keep the payroll records that show which weeks were paid and at what rate.
Check the year first
The instructions say the credit was extended to cover tax years beginning in 2021 through 2025. Before you claim it for a later year, read the current instructions for that year. The rules and dates can change.
Mistakes to avoid
- Claiming the credit before the written policy is in place.
- Leaving out the non-interference language when a qualifying employee is not covered by the Family and Medical Leave Act.
- Using the wrong revision of the form or the instructions for the tax year.
- Reporting the credit on the wrong line when the only source is a partnership or S corporation.
Other business credits are combined on Form 3800. For a related small employer credit, see Form 8941: The Small Employer Health Insurance Credit.
Keep the written policy, the leave records, and the payroll records together. Read the instructions for the tax year you are filing before you complete any line.
Sources: Sources: IRS, Form 8994, Employer Credit for Paid Family and Medical Leave (Rev. January 2021) (https://www.irs.gov/pub/irs-pdf/f8994.pdf); Instructions for Form 8994 (Rev. December 2024) (https://www.irs.gov/pub/irs-pdf/i8994.pdf) This is general information, not advice about your specific return.
More guides on: Families, education and health coverage · Tax credits and deductions
