Family Empowerment Act.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 1
SENATE BILL 538

Short Title: Family Empowerment Act. (Public)
Sponsors: Senators Theodros and Murdock (Primary Sponsors).
Referred to: Rules and Operations of the Senate
March 26, 2025
*S538-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO EXPAND CHILD CARE ASSISTANCE, ESTABLISH STATE-LEVEL FAMILY 2
LEAVE INCENTIVES, ST RENGTHEN PARENTAL SU PPORT SERVICES, AND 3
PROMOTE WORK -FAMILY BALANCE IN NORTH CAR OLINA AND 4
APPROPRIATING FUNDS FOR THOSE PURPOSES. 5
The General Assembly of North Carolina enacts: 6
SECTION 1.(a) Title. – This act shall be known and may be cited as the "Family 7
Empowerment Act." 8
SECTION 1.(b) The following definitions apply in this act: 9
(1) Child Care Assistance Program. – Financial aid for eligible families to cover 10
child care expenses. 11
(2) Family leave incentives. – State-sponsored tax incentives for businesses 12
providing paid parental or caregiving leave. 13
(3) Parental support services. – Parenting education, financial counseling, and 14
home-visiting programs to assist families in achieving economic stability. 15
(4) Flexible work arrangements. – Employer policies that allow telework, 16
alternative schedules, and caregiver-friendly workplace practices. 17
SECTION 1.(c) Findings. – The General Assembly finds t hat North Carolina 18
families face increasing economic pressures and challenges in balancing work and caregiving 19
responsibilities. Expanding access to child care, parental leave, and family support services will 20
enhance economic security and overall family well-being for the people of this State. 21
SECTION 2. Expanded Child Care Support. – The North Carolina Department of 22
Health and Human Services (DHHS) shall expand the Child Care Subsidy Program by increasing 23
funding and broadening eligibility to families earning up to three hundred percent (300%) of the 24
federal poverty level. Priority shall be given to single -parent households and families in 25
industries with nontraditional work hours. 26
SECTION 3. Reducing Costs for Working Families. – By January 1, 2027, the 27
DHHS, in conjunction with other relevant State agencies, shall develop a tiered copayment 28
structure ensuring families pay no more than seven percent (7%) of their household income on 29
child care. Child care providers receiving State subsidies shall meet qu ality early childhood 30
education standards to ensure program effectiveness. 31
SECTION 4.(a) Employer Tax Incentives for Paid Family Leave. – Pursuant to 32
Section 10 of this act, the North Carolina Department of Revenue shall establish the tax credit 33
program f or businesses offering at least four weeks of paid parental leave or paid family 34
caregiving leave. Eligible businesses shall receive a credit of up to two thousand five hundred 35
General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 538-First Edition
dollars ($2,500) per participating employee, capped at two hundred fifty thousa nd dollars 1
($250,000) per year per business. 2
SECTION 4.(b) Small Business Family Leave Grants. – By January 1, 2027, 3
businesses with fewer than 50 employees offering paid family leave shall be eligible to participate 4
in a State -funded grant program to off set costs. Grant applications shall be developed and 5
administered by the Department of Commerce, in conjunction with other relevant State agencies. 6
Funds shall be prioritized for businesses in rural and underserved communities. 7
SECTION 5.(a) Expansion of Home-Visiting Programs. – DHHS shall expand 8
funding for home -visiting programs that provide early childhood education, parenting skills 9
training, and infant health support. Services shall be prioritized for families below two hundred 10
fifty percent (250%) of the federal poverty level and those at risk of child welfare involvement. 11
SECTION 5.(b) Financial Counseling and Family Stability Services. – By January 12
1, 2027, the State shall develop and implement financial literacy workshops and economic 13
empowerment programs to assist parents with budgeting, savings, and access to resources. 14
Partnerships shall be established with community organizations, credit unions, and financial 15
institutions to expand access to free financial counseling. The Department of Commer ce shall 16
lead relevant State agencies to develop this program. 17
SECTION 6.(a) Flexible Work Arrangements Encouragement. – By January 1, 18
2027, the North Carolina Department of Labor shall develop guidelines and incentives for 19
businesses adopting flexible wo rk policies such as telework, alternative schedules, and 20
caregiving leave. Employers implementing flexible work policies shall receive State recognition 21
and certification under a new "Family-Friendly Workplace" designation. 22
SECTION 6.(b) State Employee Work-Family Balance Initiative. – State agencies 23
shall adopt model flexible work policies to support work -life balance for State employees. 24
Agencies shall conduct annual surveys to assess employee needs regarding work flexibility and 25
family support. 26
SECTION 7.(a) Funding Sources. – This act shall be funded through State 27
appropriations, federal family support grants, and public-private partnerships. 28
SECTION 7.(b) Appropriation/Time Line. – There is appropriated from the General 29
Fund to the Department of Heal th and Human Services the sum of seventy -five million dollars 30
($75,000,000) in each year of the 2025 -2027 fiscal biennium to implement and sustain the 31
programs enacted by this act, effective July 1, 2025, and July 1, 2026, respectively. 32
SECTION 7.(c) Implementation Time Line. – This act shall be implemented as 33
follows: 34
(1) Expansion of Child Care Assistance Programs shall begin by January 1, 2026. 35
(2) Employer tax incentives and Family Leave Grant Programs shall take effect 36
July 1, 2026. 37
(3) Parental Support Services Expansion shall be fully operational by December 38
1, 2026. 39
SECTION 8.(a) Family Support Oversight Board. – Effective January 1, 2026, the 40
Family Support Oversight Board (Board) is established to monitor program effectiveness and 41
recommend improvements. The Board shall consist of the following members, each to serve a 42
one-year term: 43
(1) One senator appointed by the President Pro Tempore of the Senate. 44
(2) One representative appointed by the Speaker of the House of Representatives. 45
(3) Two persons representing early childhood education organizations, appointed 46
by the Governor. 47
(4) Two persons who are labor and workforce policy experts, appointed by the 48
Governor. 49
(5) One representative from DHHS appointed by the Secretary of the Department. 50
General Assembly Of North Carolina Session 2025
Senate Bill 538-First Edition Page 3
Two cochairs of the Board shall be appointed by the Governor. Members of the Board 1
shall receive per diem and necessary travel and subsistence expenses in accordance with 2
G.S. 120-3.1, 138-5, and 138-6, as applicable. A majority of the voting members shall constitute 3
a quorum. Vacancies shall be filled by the appointing authority. 4
SECTION 8.(b) Beginning January 1, 2027, the Board shall submit an annual report 5
to the General Assembly concerning the following: 6
(1) The impact of child care support expansions. 7
(2) Effectiveness of paid family leave tax incentives. 8
(3) Work-family balance trends across participating businesses. 9
The reports shall be made publicly accessible through the DHHS website. 10
SECTION 9. Rulemaking. – The Department of Health and Human Services and the 11
Department of Labor may adopt rules to implement the provisions of this act. 12
SECTION 10.(a) Article 4 of Chapter 105 of the General Statutes is amended by 13
adding a new section to read: 14
"§ 105-153.12. Family empowerment tax credit. 15
(a) Definitions. – The following definitions apply in this section: 16
(1) Eligible employee. – An employee of an eligible employer. For purposes of 17
this subdivision , "employee" has the same meaning as provided in 18
G.S. 105-163.1. 19
(2) Eligible employer. – A business with a physical presence in this State that (i) 20
is an employer as defined in G.S. 105-163.1, (ii) provides paid leave to eligible 21
employees, and (iii) is subject to income tax under this Article. 22
(3) Paid leave. – One hundred percent (100%) paid leave provided by an eligible 23
employer for a minimum of four weeks to an eligible employee experiencing 24
a qualifying event. 25
(4) Qualifying event. – The birth of a child to an eligible employee or the 26
adoption, foster care p lacement, or other legal placement of a child with an 27
eligible employee. 28
(b) Credit. – A taxpayer who is an eligible employer is allowed a credit against the taxes 29
imposed by Part 1, Part 1A, or Part 2 of this Article, as appropriate, equal to the lesser of (i) the 30
amount of paid leave paid by the eli gible employer during the taxable year or (ii) two thousand 31
five hundred dollars ($2,500) of paid leave per eligible employee paid by the eli gible employer 32
during the taxable year. 33
(c) Limit. – The amount of credit allowed to a single eligible employer may not exceed 34
two hundred fifty thousand dollars ($250,000) for any one calendar year." 35
SECTION 10.(b) This section is effective for taxes imposed for taxable years 36
beginning on or after January 1, 2026. 37
SECTION 11. Effective Date. – Except as otherwise provided, this act is effective 38
when it becomes law. 39