Massachusetts employers should be aware of an upcoming change to the state's Paid Family and Medical Leave (PFML) contribution structure. Governor Healey recently signed Chapter 101 of the Acts of 2026, which shifts employer-required PFML contributions entirely from medical leave to family leave beginning January 1, 2027.
The change is intended to address IRS Revenue Ruling 2025-4, which treats medical leave benefits funded by employer contributions as taxable wages. By moving employer contributions away from medical leave, Massachusetts aims to reduce the withholding and reporting burdens employers could otherwise face.
For employers with 25 or more covered individuals, up to 40% of the family leave contribution may be withheld from employees' wages, while employers will be responsible for the remaining 60%. For medical leave, up to 100% of the contribution may be withheld from employees' wages.
Employers with fewer than 25 covered individuals remain responsible only for remitting amounts withheld from workers' wages and are not required to make employer contributions, though they may choose to do so.
The new law changes how PFML contributions are allocated, not the overall obligation. While Massachusetts has used the current 0.88% contribution rate in examples illustrating the new structure, that rate is for demonstration purposes only and does not represent the 2027 rate. The Department of Family and Medical Leave is expected to announce the 2027 contribution rate by October 1, 2026, so employers should monitor for updates before making payroll or budgeting decisions. For more details, read the full article.