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Paid Family and Medical Leave (PFML) Tax Information for Employers

Learn more about the taxes employers may need to remit and report on PFML benefit payments.

IMPORTANT UPDATE: On December 19, 2025, the IRS issued new guidance that impacts the tax treatment of MA PFML benefits.

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IRS Guidance Updated December, 2025

Massachusetts will delay its implementation of certain portions of the tax withholding and reporting requirements outlined in IRS Revenue Ruling 2025-4 due to new guidance issued by the IRS.

Earlier this year, the Department of Family and Medical Leave (DFML) distributed information about IRS Revenue Ruling 2025-4 and the implications for tax and reporting requirements for employers. On December 19, 2025, the Internal Revenue Service (IRS) issued IRS Notice 2026-6 which extends the transition period to implement certain portions of the guidance of IRS Revenue Ruling 2025-4 for an additional year.

Newly Updated Tax Guidance for Massachusetts Employers in 2026

For the calendar year 2026: 

  • DFML will not treat medical leave benefit payments as “third party sick pay.”
  • There will be no new employer withholding or reporting requirements for PFML benefits.
  • There will be no changes to employer FICA or FUTA tax responsibility for PFML benefits.
  • Employees may continue to elect federal and state income tax withholding on taxable benefits.
  • For employers with 25 or more employees, sixty percent (60%) of the medical leave benefits paid to employees will be will be taxable for federal and state income tax purposes. This is based on employer contribution amounts. DFML will report the taxable amount on Form 1099-G, which will be issued directly to employees.
  • Medical leave benefits paid to employees of employers with fewer than 25 employees are not taxable.
  • 100% of family leave benefit payments will be taxable for federal and state income tax purposes. DFML will report the taxable amount on Form 1099-G, which will be issued directly to employees.

Forthcoming Tax Information for Employers

We thank you for your patience as we navigate this new IRS guidance. DFML will continue to update the information on this website and in our email communications with employers. If you do not currently receive our email newsletter and would like to do so, please sign up here to join our mailing list.

Date published: October 8, 2025
Last updated: December 29, 2025

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