This bill proposes the creation of a tax credit for small businesses in Minnesota that provide paid family leave benefits to their employees. Specifically, it allows qualified employers—those with 50 or fewer employees who have been employed for at least one year—to claim a credit against their taxes for amounts paid directly for family leave benefits or to an insurance company for paid family leave insurance. The credit is capped at $3,000 or the total amount paid, whichever is lesser, and is applicable for taxable years beginning after December 31, 2023, and before January 1, 2027.

The bill also includes detailed definitions for terms such as "qualified employee," "family leave," and "serious health condition," which clarify the eligibility criteria for both employees and employers. Additionally, it outlines provisions for nonresidents and part-year residents regarding credit allocation, as well as how credits are passed through to partnerships and other entities. Any unused credit can be carried over for up to five succeeding taxable years, ensuring that small businesses can benefit from this tax incentive even if their tax liability is lower than the credit amount in the year it is earned.