Just prior to the launch of the Minnesota Paid Family & Medical Leave program, the Internal Revenue Service (IRS) changed its guidance regarding federal tax treatment for state Paid Leave programs in 2026.

Specifically, the IRS has provided an additional year for the “transition period provided in Revenue Ruling 2025-4 for States administrating paid family and medical leave (PFML) programs and employers participating in such programs with respect to the portion of medical leave benefits a State pays to an individual that is attributable to employer contributions.” This is positive news for small business owners, as it results in a delay of certain federal tax withholding and reporting requirements for PFML until 2027.

Small business owners can access the initial guidance from the IRS in Revenue Ruling 2025-4. The recent decision to delay implementation can be found in IRS Notice 2026-6.

More information and additional resources can be found on Minnesota Paid Leave’s Taxes and Paid Leave webpage.