What Happened?

As a reminder for employers in Massachusetts, the Department of Family and Medical Leave (DFML) has announced important updates to the Paid Family and Medical Leave (PFML) program effective January 1, 2026. These changes impact benefit amounts, contribution rates, and tax reporting obligations.

Overview

Why this matters: Employers must update payroll systems, tax reporting processes, and employee notices to remain compliant. Failure to act could lead to tax errors, penalties, and employee confusion.

Action Steps for Compliance:

• Update payroll systems for the new maximum weekly benefit.
• Review tax reporting processes: Large employers must report employer-funded medical leave benefits on W-2 and pay FICA/FUTA.
• Post updated DFML posters and issue 2026 rate sheets to employees.
• Provide PFML notices to new hires within 30 days.
• Verify private PFML plans meet or exceed state benefits.
• Access DFML Employer Portal for tax details and reporting guidance.

Additional Information

• Maximum weekly PFML benefit increases to $1,230.39 (up from $1,170.64), based on the new State Average Weekly Wage of $1,922.48.

• Contribution rates remain unchanged:

• Large employers (25 or more employees): 0.88% total (0.18% family + 0.70% medical).
• Small employers (fewer than 25 employees): 0.46% total (0.18% family + 0.28% medical).

• IRS Revenue Ruling 2025-4 (Link): introduces new tax treatment rules for PFML benefits starting January 1, 2026.

Key Risks for Employers:

• Incorrect W-2 reporting for taxable medical leave benefits.
• Outdated payroll configurations for the new benefit amount.
• Missing required employee notices and workplace posters.
• Non-compliance for private PFML plans that do not match state benefit levels.

For additional details:

• PFML Employer Contribution Rates and Calculator.Massachusetts Department of Family and Medical Leave (DFML) regarding IRS Revenue Ruling 2025-4 – Memo
• Massachusetts – PFML workplace poster, notices, and rate sheets for Massachusetts employers

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