The new year brings some changes to the Massachusetts Paid Family and Medical Leave (PFML) program.
As calendars flipped to 2026, Massachusetts employees became eligible to receive an increased amount of PFML benefits. As we have written about in previous articles, PFML entitles eligible employees to receive partial wage-replacement benefits while on leave to tend to a personal health crisis, the arrival of a child, an ill loved one, or an active duty-related emergency. For 2025, the maximum benefit amount was capped at $1,170.64 per week. For 2026, the maximum benefit amount has been increased to $1,230.39 per week.
Importantly for Massachusetts employers, who in the absence of an exemption are required to remit family and medical leave contributions to the Department of Family and Medical Leave (DFML), the increased amount of weekly wage-replacement benefits available to employees has not resulted in any increase to the PFML contribution rate for 2026. For employers with 25 or more covered individuals, the contribution rate will remain at 0.88% of eligible employee wages. For employers with fewer than 25 covered individuals, the contribution rate will remain at 0.46%. Employers who have received an exemption from their obligation to remit PFML contributions should nonetheless be sure to update their plans to ensure that employees receive the newly revised maximum benefit amount.
Employers should also be sure to update required notice materials. The DFML has now issued the 2026 mandatory workplace poster, work force notices, and rate sheets. All are available here.
The DFML also recently released a guidance explaining how the IRS’s issuance of Revenue Ruling 2025-4 and IRS Notice 2026-6 will impact Massachusetts employers. Revenue Ruling 2025-4 explains how the IRS will treat benefits received from, and contributions made to, state-administered paid family and medical leave programs and reporting requirements. It is the first comprehensive guidance from the IRS on tax treatment of PFML benefits and contributions to state PFML programs. Notably for exempt employers, the Ruling does not cover private or self-insured plans.
Based on the IRS’s issuance of Notice 2026-6, which extends the implementation transition period provided to state paid family and medical leave programs and employers for an additional year, Massachusetts will delay its implementation of certain portions of the tax withholding and reporting requirements outlined in IRS Revenue Ruling 2025-04. Per the DFML guidance, in 2026:
- The DFML will not treat medical leave benefit payments as third-party sick pay.
- There will be no new PFML withholding or reporting requirements for employers.
- There will be no changes to FICA or FUTA tax responsibilities related to PFML benefits for employers.
- Employees may continue to elect federal and state income tax withholding on taxable benefits.
- For those who employ 25 or more employees, 60% of the medical leave benefits paid to employees will be taxable for both federal and state income tax purposes.
- For those who employ less than 25 employees, medical leave benefits paid to employees will not be taxable.
- 100% of family leave benefit payments will be taxable for federal and state income tax purposes.
Employers should consult with their legal counsel and tax advisors regarding these recent developments, as well as continue to monitor for forthcoming DFML guidance to assist in navigating this relatively new area of law.
