The Minnesota Paid Leave Program has announced that the payroll tax rate to fund the Paid Family & Medical Leave (PFML) program will be 0.88% when the program goes into effect in January 2026. This payroll tax rate conforms with a third-party actuarial analysis and is a 46% increase from the initial 0.6% rate that was proposed in the original version of the PFML bill in 2023. Of the total payroll tax, employers will be permitted to pass up to 50% (0.44%) onto employees.

The Paid Leave Program has also launched a payroll tax calculator to help estimate the costs for employers and employees. This calculator will only provide an unofficial estimate of payroll tax amounts, as the actual amount of payroll tax liability will be based on exact wage details reported to the Paid Leave Program.

The first payroll tax payments are due on April 30, 2026, and will be based on wage details reported between January 1, 2026, and March 31, 2026. Effective January 1, 2026, employers will be permitted to deduct the employee portion of the payroll tax from paychecks.

NFIB Minnesota remains committed to pursuing program changes that will reduce the cost and burden on small employers.