Under Revenue Ruling 2025-4, amounts paid to an employee under a state’s PFML program should be included in an employee’s gross income and are wages for federal employment tax purposes. However, for 2025, states and employers did not have to comply with the employment tax and reporting requirements in that revenue ruling.
In its latest notice, the IRS stated, “States may need additional time to make the necessary changes to their systems and state budgets to comply with their federal income tax and employment tax obligations, as well as related information reporting responsibilities…. For this reason, calendar year 2026 will be regarded as an additional transition period for purposes of IRS enforcement and administration.”
The grace period does not apply to employer “pick-up” contributions, when an employer voluntarily pays an employee’s required PFML contribution. Those amounts still must be considered wages and reported on Form W-2.
California, Colorado, Connecticut, Delaware, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, Oregon, Rhode Island, Washington, and Washington, D.C., have mandatory paid family and medical leave programs. In some states, the benefit payments have not started yet.
Employers will not...
Four pharmacies in Hudson County agreed to pay more than $4 million to settle claims that they billed federal healthcare programs for medications they never filled, federal prosecutors said. The ph...