The Paid Family and Medical Leave (PFML) landscape is becoming increasingly complex as more states introduce their own paid leave laws. Several states finalized regulations and began collecting contributions in 2025 and will begin paying benefits in 2026. Meanwhile, although multiple federal proposals have aimed to create more consistency across states, progress has stalled and we anticipate that this gridlock will likely persist under the current administration.

Outside of New England, California, Colorado, Delaware, Hawaii, Maryland, Minnesota, New Jersey, New York, Oregon, Puerto Rico, Washington, and the District of Columbia have mandatory paid family and/or medical leave laws in place.  While there were no new programs passed in 2025, 2026 may likely be more active in the paid leave space, with states like Pennsylvania and Virginia high on the watch list. Employers should be aware of all paid leave laws for the jurisdictions in which they have employees working and ensure they comply with any and all applicable regulations. 

In addition, the IRS has updated requirements for state paid family and medical leave programs, providing states additional times to meet requirements prior to enforcement. Details are provided later in this blog.

The recent experience of state PFML programs in New England is detailed below.

Connecticut

The Connecticut Paid Leave Program has now been in effect for three years. The program continues to grow, including total applications and approved claims, as shown in the summary below. 

CT Paid Leave Changes as of January 1, 2026

Based on the Paid Leave claims experience, Connecticut is not making any major changes to the program in 2026. The contribution rate will remain at 0.5% up to the Social Security wage contribution cap, which is increasing to $184,500 in 2026, up from $176,100 in 2025. In addition, the CT minimum wage increases to $16.94 in 2026, from $16.35 per hour in 2025, which results in an increase of about $35 for the maximum weekly benefit, now $1,016 ($981.00 in 2025). 

Maine

Maine's Governor signed the state’s PFML program into law in 2023. Contributions to Maine’s PFML program began January 1, 2025. While benefits do not become available until May 1, 2026, Employers should ensure they are in compliance with the program as the go-live date approaches. Organizations should ensure they are registered with the state, or have an approved private plan, are coordinating other leave policies appropriately, have updated any internal handbooks or policies, and have notified employees of the upcoming benefit. Additional information can be found on the Maine Department of Labor website.

Massachusetts

Over the past five years, the Massachusetts PFML program has continued to evolve, with ongoing adjustments to benefit limits, contribution rates, reporting requirements, and administrative processes. These updates reflect the state’s efforts to refine program operations as claim volume and participation continue to grow.

Applications for MA PFML have increased each year, and approved claims have risen alongside them. While total benefits paid climbed again in 2025, the program also saw meaningful improvements including: processing times continued to decline, and the average duration of leave decreased across most leave types, reinforcing the impact of recent system updates and 2025 program adjustments.

MA PFML Changes as of January 1, 2025

The MA PFML weekly maximum benefit amount increased effective January 1, 2025.  The maximum weekly benefit is $1,230.39 in 2026, compared to $1,170.64 in 2025. The higher maximum applies for any leaves with a benefit year beginning January 1, 2025, or later.

The total contribution rate of 0.88% will remain unchanged in 2026. For employers with 25 or more covered individuals, the medical leave contribution is 0.70%, with employers funding 0.42% and employees responsible for up to 0.28%. The family leave contribution is 0.18%, with employers able to collect the total contribution from employees. Employers with less than 25 employees are not required to submit the employer portion of premiums, so the effective total contribution rate is 0.46%.

New Hampshire

New Hampshire began paying benefits for the first Voluntary PFML Plan in the nation on January 1, 2023. While state workers are automatically covered, private employers may purchase coverage through the State’s insurance carrier partner, MetLife, and receive a 50% Business Enterprise Tax (BET) Tax Credit. Individuals who are not covered by a NH PFML plan or equivalent plan may purchase individual plan coverage.

The experience of the first year of the program is outlined below. Additional data has not been published by the State.

New Hampshire Paid Family and Medical Leave Changes as of January 1, 2026

The maximum weekly benefit for NH PFML is 60% of the Social Security wage cap, which is $184,500, up from $176,100in 2025. Therefore, the maximum weekly benefit is $2,128.85, an increase from $2,031.92 in 2025.

Rhode Island

Rhode Island established the first statutory disability program in the country in 1942, known as Rhode Island Temporary Disability Insurance (TDI). In 2014, they became the third state to offer family leave benefits through their Temporary Caregiver Insurance (TCI) program. The state does not allow private plans, making the model slightly different than other PFML programs in the region.

RI Temporary Disability and Temporary Caregiver Insurance Changes as of January 1, 2026

On January 1, 2026, a few updates to TDI and TCI became effective. The State’s taxable wage base increased to $100,000, up from $89,200 in 2025. The contribution rate in 2026 is 1.1%, which is a decrease of 0.2% from the previous year. The maximum weekly benefit is $1,103, not including the dependency allowance,¹⁸ and the minimum weekly benefit is $148. 

Employees must have paid contributions of at least $19,200 or one quarter of the base period wages or meet the alternative conditions wherein they earned at least $3,200 in one of the base period quarters, have total base period taxable wages at least 1.5 times the highest quarter of earnings ($4,800), and have base period taxable wages equal at least $6,400.¹⁹

Rhode Island also expanded TCI coverage and now consider Siblings are covered family members. In addition, covered leave reasons were expanded to provide bone marrow donors with 1 week of TCI and organ donors 30 business days of TCI.  

Vermont

The Vermont Optional Family and Medical Leave Insurance (FMLI) program began providing benefits to state employees on July 1, 2023, and opened to private sector employers on July 1, 2024. The program expanded on July 1, 2025, to allow individuals and employers with one employee to purchase coverage through the individual pool. Insurance coverage is available through the State’s insurance partner, The Hartford.

Data on historical VT FMLI experience has not been published. Details on the FMLI program can be found on The Hartford’s VT FMLI website.

Paid Family Leave Insurance Rules

In addition to the mandatory state programs mentioned, and the voluntary programs in New Hampshire and Vermont, several states have established paid family leave insurance rules. These rules allow insurance carriers to offer insured paid family leave products to interested employers and have been enacted in Alabama, Arkansas, Florida, Kentucky, Tennessee, Texas, and Virginia. The rules provide the minimum requirements an insured PFL plan must offer. New Hampshire has also established insurance rules, even though they have a state PFML program. Take up of these offerings has been minimal. These insurance rules do not preclude a state from creating a mandatory state paid family and medical leave program.

PFML Tax Guidance

In 2025, the IRS released the much anticipated Revenue Ruling 2025-4, advising on the tax treatment of State Paid Family and Medical Leave contributions and benefits. For federal tax purposes, the following treatment applies to contributions:

• Employer Contributions: Generally, employer PFML contributions are excluded from an employee's  gross income and are not subject to FICA, FUTA, or federal income tax withholding.
• Employee Contributions: Employee PFML contributions are typically considered after-tax and are therefore not subject to federal taxation.
  • If an employer funds the employee portion, this payment is considered additional compensation and is subject to FICA, FUTA, and income tax withholding.

The tax treatment of PFML benefits depends on whether the leave is for medical or family reasons, and whether the benefit is attributable to employer or employee contributions. Some states specify contribution allocations (e.g., Delaware, Massachusetts, Minnesota, New Jersey, New York), while others do not, potentially creating ambiguity for employers.  Employers should consult a tax expert to address any questions.

• Medical Leave:
  • Employer-Attributable Benefits: Included in federal gross income as wages, subject to sick pay reporting rules, and considered third-party payments of sick pay.
  • Employee-Attributable Benefits (or Employer-Funded Employee Portion): Excluded from federal gross income.
• Family Leave:
  • Employer-Attributable Benefits: Included in federal gross income (not wages). The state must file with the IRS and issue a Form 1099 to the employee.
  • Employee-Attributable Benefits (or Employer-Funded Employee Portion): Included in federal gross income (not wages). The state must file with the IRS and issue a Form 1099 to the employee.

On December 19, 2025 the IRS released Notice 2026-06 extending the transition period before enforcement of the above taxation applies to 2027, allowing states additional time to make necessary updates. The delay does not extend transition time to employer’s voluntarily contributing portions of the employee premium, and those taxation rules will go into effect in 2026.

Now what?

As the PFML landscape continues to evolve at the local, state and federal level, employer policies need to be monitored on an ongoing basis. If any of your employees are subject to a state PFML program, you should periodically review your plans, policies, and processes to confirm they are in compliance with any legislative changes.

The following checklist can be helpful when employers are reviewing their policies, plans, and processes:

• Register in any state that enacts a new PFML program in which employees are working
• Review your contribution strategy and ensure contributions are being collected
• Confirm federal and state taxes are set up to be collected and reported appropriately
• Update employee notices and benefit documentation
• Consider private plans where available and in accordance with your corporate philosophy
• Ensure company sponsored leave programs coordinate with PFML to the extent possible
• Monitor changes in legislation that may impact compliance

If you need assistance ensuring PFML compliance or assessing the optimal plan set up for your organization, visit our Spring Consulting Group Paid Family and Medical Leave dashboard for additional information. 

Grace Giannattasio, Consultant, Spring Consulting Group, An Alera Group Company, LLC
[email protected]   
linkedin.com/in/grace-giannattasio