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The IRS has released Revenue Ruling 2025-4, offering long-awaited guidance on federal tax treatment for state paid family and medical leave (PFML) programs, including income and employment tax rules and reporting requirements, effective January 15, 2025.
The ruling takes effect on January 1, 2025, with transitional relief for payments in 2025. Thirteen states and D.C. have mandatory PFML programs, but voluntary programs are not covered.
IRS Revenue Ruling 2025-4 covers contributions and payments for state PFML programs. Employers and employees can generally deduct required contributions, with varying rules based on benefit payment inclusion as income.
Employers should review the revenue ruling to ensure compliance with federal tax requirements for PFML contributions and payments. They should also make sure payroll and W-2 practices align with this guidance. The IRS invites comments on additional state PFML issues not covered, due by April 15, 2025. Download the bulletin for more details.
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