Paid Family Leave (PFL) and Paid Family & Medical Leave (PFML)
This article is for admins who want to learn about Paid Family Leave (PFL) and Paid Family & Medical Leave (PFML) benefits, as well as how they work.
Several states offer PFL and PFML benefits. These benefits give employees partial pay when they take time off for qualified family or medical reasons.
Expand the sections to learn more. Use CMD + F (or CTRL + F) to search for words in the article.
If a state funds Paid Family Leave (PFL) or Paid Family and Medical Leave (PFML) through employee or employer taxes, we usually pay these taxes to the state for you.
Note: In some states, like Massachusetts and Washington, employers can choose to pay some or all of the employee’s share of the PFML tax. If you choose to pay the employee’s share, we treat that amount as taxable income for the employee.
To learn if we handle a state’s PFML tax deductions and payments:
Find the applicable state registration article from our 50-state registration resource page.
Click the article title: [State] registration and tax info.
Expand the sections to find one about PFML (typically in the “Register on your own” section) or use CMD + F (or CTRL + F) to search for “PFML” or “Paid leave” throughout the article.
If private insurance carriers fund PFL or PFML, we will not make the premium payments on your behalf.
If you need to reduce your employee’s salary while they’re on PFL or PFML, schedule a compensation change in their employee profile.
State agencies or private insurance carriers handle PFL/PFML coverage and claims, depending on the state. For example, in New York, employees submit claims directly to the insurance carrier.
We are not able to advise on the amount of coverage an employee may receive.
Use the table below to check whether we handle a state’s PFML tax deductions and payments, and to find agency resources for each program.
Note: In some states, like Massachusetts and Washington, employers can choose to pay some or all of the employee’s share of the PFML tax. If you choose to pay the employee’s share, we treat that amount as taxable income for the employee.
This table provides a summary of the PFML contribution requirement, along with an agency-specific resource about the program.
State
Employer tax contribution
Employee tax contribution
Wage limit on taxation
More information
None
1.2% (included in disability contribution)
None
Learn more in our CA registration and tax info article.
Employers with 10 or more employees: 0.45%
Employers with 9 or fewer employees: 0.00%
0.45%
Social Security wage limit
Important: As of 2025, we no longer file CO FAMLI taxes for self-employed individuals (SEIs) due to new filing requirements and the need for supporting documentation that we do not have.
Learn more in our CO registration and tax info article.
None
0.50%
Social Security wage limit
We support Connecticut’s PFML program. We deduct 0.5% from CT employee payrolls and submit these deductions to the CT Paid Leave Authority quarterly.
You still need to register your business, but we use your Federal Employer Identification Number (FEIN) to file and pay the tax, so we do not need the CT “PFML account ID” you receive when you register.
For more detail, go to the CT state tax registration article.
Effective January 1, 2025
Total contribution: 0.4%
0.16% for parental leave
0.2% for medical leave
0.04% for caregiving leave
Who pays?
25 or more employees: Pay full 0.4%
10–24 employees: Pay only 0.16% (parental leave)
9 or fewer employees: No employer or employee payment required
Total contribution: 0.4%*
0.16% for parental leave
0.2% for medical leave
0.04% for caregiving leave
*Employees are ultimately responsible for the full contribution amount (employer and employee), but you can choose to have your employees help pay the tax.
Social Security wage limit
We support Delaware’s PFML program. Your requirement to provide PFML depends on the number of employees you have.
You’ll need to register for the program and enter the DE PFML account ID in Gusto. We’ll use this ID to file and pay the tax.
Learn more in our DE registration and tax info article.
Effective January 1, 2025
Employers with 15 or more employees: 0.50%
Employers with 14 or fewer employees: 0.00%
0.50%*
*Employers are ultimately responsible for the full contribution amount (employer and employee), but you can choose to have your employees help pay the tax.
Social Security wage limit
Learn more in the PFML section of our ME registration and tax info article.
Effective January 1, 2027
Employers with 15 or more employees: 0.45%
Employers with 14 or fewer employees: 0.00%
0.45%
Social Security wage limit
Learn more in our MD registration and tax info article.
Employers with 25 or more employees: 0.42% (for medical leave)
Employers with 24 or fewer employees: 0.00% (for medical leave)
Employers are not required to contribute to family leave.
0.28% (for medical leave)
0.18% (for family leave)
Social Security wage limit
Learn more in our MA registration and tax info article.
Effective January 1, 2026
0.44%
0.44%
Social Security wage limit*
*A lower wage base applies to employers with 29 or fewer employees.
Learn more in our MN registration and tax info article.
New Hampshire
New Hampshire’s program is voluntary.
The premium amount depends on your employee list, the plan you select, and the amount you decide to cover.
Employers get a 50% Business Enterprise Tax (BET) credit on the premiums they pay.
Employers can choose to pay 0%, 50%, or 100% of the premium.
If the employee buys their own plan, the state caps it at $5 per week.
Social Security wage limit
New Hampshire’s program is voluntary — employers do not have to join.
What does the benefit look like?
Pays 60% of the worker’s wages
Up to 6 weeks per year
The state offers it through MetLife
None
0.33%
$165,400
NJ FLI (Family Leave Insurance) is one of four taxes reported to the NJ Department of Labor and Workforce Development. The other three are:
Unemployment
Disability
Workforce development/supplemental workforce taxes
Most taxes have both employee and employer contributions, except PFL, which only employees pay.
We withhold the correct tax amounts from employees based on NJ’s tax rates.
Employers only need to provide their Unemployment Experience Rate in Gusto.
None
0.388%
Employees earning the NY state average weekly wage of $1,757.19/week (~$91,300/year) or more:
Pay 0.388% of their wages each paycheck
Stop paying once they’ve paid a total of $354.53
Learn more about family leave coverage and how to set up related payroll deductions in our NY registration and tax info article.
Employers with 25 or more employees: 0.40%
Employers with 24 or fewer employees: 0.00%
0.6%
Social Security wage limit
Learn about the program and how we handle it in the Oregon registration and tax info article.
We do not file Oregon Paid Leave taxes for self-employed individuals (SEIs).
None
1.3% (included in disability contribution)
$89,200
PFL, known as Temporary Caregiver Insurance (TCI), is part of the TDI tax (1.3%).
Employers must deduct TDI from employee wages. We withhold the TDI tax from each paycheck and send it to the agency when due.
We report TDI with unemployment tax, so employers do not need to register separately for it.
None
Employees can buy benefits from their employer (if offered) or from the Vermont FMLI plan if their job does not offer coverage.
None
Vermont’s voluntary PFL program (VT-FMLI) began providing paid family leave benefits in 2025. The Hartford administers the program.
Virginia
No mandatory state program
No mandatory state program
Not applicable
Virginia does not have its own PFML program. Employers can buy voluntary private family leave insurance from state-approved carriers.
0.75%
None
None
Learn more in the PFL section of our Washington, D.C. registration and tax info article.
Employers with 50 or more employees: 0.3229%
Employers with 49 or fewer employees: 0.00%
0.8071%*
*Employers are ultimately responsible for the full contribution amount (employer and employee), but you can choose to have your employees help pay the tax.
Social Security wage limit
Learn more about the program in the “Step four: Paid Family Medical Leave (PFML) setup” section of our WA registration and tax info article.
States without a state PFML program
If your state does not appear in the table above, it does not have a mandatory state Paid Family and Medical Leave (PFML) program. You do not need to take any action for state PFML in Gusto.
This includes states like Florida, Texas, Georgia, Pennsylvania, Ohio, North Carolina, Michigan, Illinois, and Arizona, among others.
Keep in mind: Federal FMLA (unpaid, job-protected leave) may still apply if you have 50 or more employees. Federal FMLA does not go through payroll and does not affect your Gusto tax filings.
Note: The Internal Revenue Service (IRS) gave states an extra year to set up tax reporting for paid family and medical leave benefits. Employers are unlikely to receive state PFML reports until 2027. Employers are not required to remit taxes on state-paid benefits for the tax year 2026.
Use this section if:
You offer paid family or medical leave through a state-run program, and
You receive benefit payment reports from the state
In some cases, payroll taxes now apply to state-paid benefits. When this happens, we calculate the taxes and file the required payroll reports on your behalf.
Step 1: Set up your paid family and medical leave benefit in Gusto
Add the benefit in Gusto before we can handle reporting.
To set up your paid family and medical leave benefit:
Go to Benefits.
Under Financial Health, click Show more financial health benefits.
Next to Disability/Leave, click Set up.
Click Yes, we currently offer this benefit.
Click Next.
Name the benefit and choose the plan type (for example: Colorado Paid Family & Medical Leave).
Enter the amounts below. We’ll calculate the correct amount of taxes owed to agencies.
$0.00 for employee deduction
$0.01 for company contribution
Upload your plan document.
Click Save & Continue.
Select the employees enrolled in the benefit.
Click Save & Continue.
We’ll automatically calculate and withhold any required taxes when the state pays benefits.
Step 2: Record an employee’s leave of absence
To record a leave of absence:
Go to People.
Select the employee.
Under Additional, click Benefits.
Under Disability, click Manage Leaves.
If you do not see this option, make sure the benefit is set up and the employee is enrolled.
Click Add Leave.
Enter:
Start date
Reason for leave (for your records)
End date (you can add this later)
Click Save.
Update the end date when the employee returns to work.
Step 3: Review state benefit payment reports
When an employee receives paid leave benefits, the state sends you a distribution report. These reports may arrive daily or weekly and usually include:
Employee name
Benefit amount paid
Leave type (family or medical)
Taxes already withheld (if any)
You may owe payroll taxes only if:
The benefit is for medical leave, and
You contributed to medical leave premiums
Step 4: Know which benefits are taxable
Family leave benefits
Not subject to payroll taxes
Employees pay income tax when they file their personal return
Employers do not owe payroll taxes
Medical leave benefits
Payroll taxes apply only to the employer-funded portion
Step 5: Calculate payroll taxes on medical leave benefits
Find your employer contribution rate
Check your state PFML setup in Gusto: Go to Taxes & Compliance, then Tax Setup.
Examples
Massachusetts: 60% employer contribution → 60% of benefits are taxable
California: 0% employer contribution → 0% of benefits are taxable
Your state rate may differ.
Calculate the taxable amount
Formula: Benefit amount × employer contribution rate = taxable amount
Example
The employee receives $1,000 in medical leave benefits
Employer contribution rate: 60%
Taxable amount: $600
You owe:
Employer Federal Income Contribution Act (FICA) taxes on $600
Employer Federal Unemployment Tax Act (FUTA) taxes on $600
Step 6: Upload benefit payment reports to Gusto
To upload a medical leave payment report:
Go to People.
Select the employee.
Under Additional, click Benefits.
Under Disability, click Manage Leaves.
Find the correct leave and click Edit.
Under Source, upload the state payment document.
Click Save.
Important: If the document says you must include the payment on payroll:
Upload the document, then
Contact us so we can review the payment and make sure taxes and reports are correct. To contact us, sign in to your Gusto account and click the help icon
in the top-right corner of the page.
Report annual benefits (Form 8922)
You may need to file IRS Form 8922, depending on how benefits appear on Forms W-2.
You must file Form 8922 if:
The insurer or agent reports benefits on the W-2 under their name and Employee Identification Number (EIN)
We do not currently support filing this form. Use the IRS Form 8922 instructions to file it yourself if required.
You do not need to file Form 8922 if:
Benefits are reported under the employer’s name and EIN
Benefits are family leave only
Medical leave has 0% employer contribution
Use this guide to set up your policy, track leave, and claim the credit. You need a written policy and good records to meet the qualification requirements.
Step 1: Create a written paid family and medical leave policy
You must have a clear, written policy before you can claim the credit.
Your policy must:
Provide at least 2 weeks of paid family and medical leave annually to full-time employees
Provide part-time employees with a similar amount of leave based on their regular hours
Cover common leave reasons, like:
Birth or adoption of a child
Caring for a family member with a serious health condition
The employee’s own serious health condition
Pay at least 50% of the employee’s regular wages during leave
Protect employees who are not covered by federal FMLA. Add language like:
“We will not stop any employee from using their leave rights or punish any employee for using them.”
Helpful resources:
Tell employees about the policy: send an email, add it to your employee handbook, or post it somewhere visible at work. If you upload the policy in Gusto, we’ll notify employees to acknowledge it.
Step 2: Check which employees qualify
You must confirm that the leave you pay qualifies for the credit.
Employee eligibility:
The employee must have worked for you for at least one year.
Starting in 2026, you may allow eligibility after 6 months instead of 12 months.
The employee must have earned less than $93,000 in 2024 (this applies to the 2025 tax year).
This amount changes every year.
You can find the current limit in the IRS instructions for Form 8994 under “Prior Year Compensation Limit.”
Important: Do not leave out any group of employees who meet the requirements.
Step 3: Set up the policy in Gusto
Add your paid family and medical leave policy in Gusto. This makes it easier to track leave and pay inside payroll.
Step 4: Track leave and payments
Track this leave separately from any state or local paid leave.
Keep records for each employee:
Name and Social Security number
Dates of leave
Length of leave
Amount you paid during leave
Reason for leave
Keep these records for at least 3 years.
Use a tracker
Open the leave tracker template.
Click File.
Select Make a copy.
This saves your own editable version.
Step 5: Claim the tax credit
Starting in 2026, you can choose how to claim the credit:
Claim the credit on wages you paid during qualifying leave, or
Claim the credit on a percentage of premiums you paid for an insurance policy that covers paid family and medical leave
Important: You must choose either premiums or wages for the credit. You cannot claim both for the same leave.
How to file:
Work with your accountant or tax professional to claim the credit. If you do not have one, use the Gusto Partner Directory to find one.
File IRS Form 8994 with your business tax return.
You may also need IRS Form 3800.
Step 6: Avoid common mistakes
Keep your policy and records up to date and accurate to stay eligible.
Watch out for:
Writing an unclear policy or not writing one at all. This can result in loss of the credit or an IRS audit
Not keeping records for each employee and each leave
Mixing this leave with regular PTO, sick time, or vacation. Track paid family and medical leave separately
Claiming the credit on leave your state or city already requires you to offer. You can only claim the credit on the extra leave you choose to provide
Owning more than one business (aggregation). If you do, use the same policy for all your businesses unless you have a strong business reason not to