Massachusetts Paid Family And Medical Leave Updates For 2026

Effective January 1, 2026, under the Massachusetts Paid Family and Medical Leave (PFML) law: (1) employees will be entitled to higher maximum weekly PFMLA benefits, (2) contributions rates will remain unchanged, and (3) employers will be required to comply with new IRS tax and reporting requirements.

PFML applies to nearly all private employers with at least one employee in Massachusetts, including out-of-state employers with Massachusetts-based employees. Employees can take paid leave for medical, family, or military-related reasons, with durations ranging from up to 12 weeks for family leave, 20 weeks for medical leave, and 26 weeks for military caregiver leave, for a combined maximum of 26 weeks per benefit year. Contributions are shared between employers and employees, with rates set annually by the Department of Family and Medical Leave ("DFML").

Below, we take a closer look at the PFML changes coming in January:

1. Higher Maximum Weekly Benefit
   The maximum 2026 weekly PFML benefit will rise to $1,230.39, an increase from the 2025 maximum of $1,170.64.
   
   
2. Contribution Rates Remain the Same
   For employers with 25 or more employees, the total contribution rate remains at 0.88% of eligible wages. The employer's required share is .42% (60%of total medical leave). The employee's share is .46% (.28% medical leave and .18% family leave). Although the employer is required to pay 60% of the medical leave portion, it may choose to pay all or part of the employee's portion ("Employer Pick-up").
   
   For smaller employers (fewer than 25 employees), the total contribution rate is 0.46% (.28% medical leave and .18% family leave) of eligible wages. Employees are responsible for paying the entire amount. Employers may choose to pay the employee's share or any portion thereof (Employer Pick-up).
   
   In each case, the employer is responsible for remitting the employee's share to DFML.
   
   
3. New Federal Tax Rules
   On January 15, 2025, the IRS issued Revenue Ruling 2025-4 (the "Ruling") which details the federal income and employment tax treatment of benefits received from and contributions made to state administered paid family and medical leave programs, as well as reporting requirements. The Ruling applies only to state-run PFML programs. It does not cover the tax treatment of benefits received from private or self-insured plans. Although the Ruling was issued and effective for calendar year 2025, the IRS determined that enforcement would commence in 2026.
   
   The type and amount of taxes that will be taken out of PFML benefit payments will depend largely on the type of leave taken (family or medical), the employer's size (25 employees or more), and voluntary contributions made by the employer.
   
   
   • Family Leave Benefits
     The Ruling does not change the tax treatment or reporting of family leave benefits. All family leave benefits continue to be subject to federal and state income taxes, but not federal employment taxes. They are considered reportable income but not wages. Form 1099-G will be issued by DFML to employees for paid family leave benefits.
   • Medical Leave Benefits
     The Ruling makes significant changes to the tax treatment and reporting of medical leave benefits. Prior to the Ruling, medical benefits generally were treated as non-taxable wage replacements reported by the DFML on Form 1099-G. The Ruling reclassified the portion of medical leave benefits attributable to employer funded medical contributions (both mandatory and Employer Pick-ups) as third-party sick pay (wages) subject to federal and state income taxes and federal employment taxes. These benefits are reportable by employers on Form W-2. The portion of medical leave benefits attributable to employee funded medical contributions are not subject to federal or state income taxes and do not trigger federal employment taxes.
     
     
4. DFML Updated Materials
   DFML released the 2026 mandatory workplace poster, rate sheets, and individual notice templates. These documents can be accessed here.
   
   
5. Next Steps for Employers
   To prepare for the upcoming changes to MA PFML, employers should consider taking the following actions:
   
   • Check your workforce presence in Massachusetts, counting full-time, part-time, and temporary workers, including those working remotely. If you have even one Massachusetts employee, PFML applies.
   • Determine if your Massachusetts workforce comprises 25 or more employees, the required threshold for required employer contributions.
   • Comply with all statutory registration, contribution remittance, and reporting requirements.
   • Ensure your payroll provider and benefits administrator are aware of the new PFML maximum weekly benefit and tax rules. Ascertain how they will calculate, track, and report taxable sick pay relative to medical leave benefits.
   • Consult your tax professional to understand your responsibilities under the Ruling.
   • Download and display the updated PFML poster prominently in the workplace for on-site employees and make it digitally accessible for remote and off-site employees (e.g. via email or the employer's intranet).
   • Provide required notices to covered individuals of changes to the PFML program, including the maximum weekly benefit amount and updates to contributions rates, if any (e.g. Employer Pick-ups).
   • Use DFML's current individual notice templates for new hires and keep records of the notices, including signed acknowledgements.