New Law Alert: Paid Family and Medical Leave (2026)
This past May, Governor Tim Walz signed a new bill that would entitle Minnesota’s workers to paid time off starting January 1, 2026, making Minnesota the 12th state in the nation to require such benefits. So, whether you are an employee or employer, it’s important to understand the bill, its benefits, and your tax obligations.
What is the Program?
Paid Family and Medical Leave is a new program that provides employees in Minnesota up to 12 weeks a year off with partial pay for both medical leave and family leave. Benefits are capped at 20 weeks a year for employees who take advantage of both types of leave.
Under these two categories, the law specifically provides:
- Medical leave to address workers’ own serious health conditions, including pregnancy
- Caregiving leave to allow workers to care for a loved one with a serious health condition
- Parental leave to provide workers the time to bond with a new child
- Safety leave for certain needs when workers or their loved ones experience sexual or domestic violence
- Deployment-related leave to deal with the impact of a loved one’s military deployment
Workers will be able to begin taking leave and receiving benefits on January 1, 2026. Workers and employers will begin contributing to the program on that same date.
Who Does It Cover?
The law will cover nearly all employees in Minnesota, including:
- Private sector employees
- State and local government employees
- Full-time employees
- Part-time employees
However, employees must have earned more than $3,500 in wages within the state over a period of a year before they are eligible for benefits.
Note: Certain seasonal workers are excluded from coverage. Self-employed people will be able to voluntarily opt in to coverage.
Who Pays For It?
Initially, the program will be funded through substantial appropriations from the state’s general fund. This initial funding will make it possible for benefits to begin at the same time workers and employers begin paying in. After the initial period, the program will be funded by a new 0.7% payroll tax on employers that will take effect in 2026, according to ABC News.
Employers can deduct half of their premiums from workers’ wages but are not obligated to. If employers do choose to deduct half of their premiums from employees’ wages, then employees and employers will each pay 0.35 percent on income (up to the maximum income subject to contributions for Social Security). Rates will later be adjusted annually based on program usage.
Employers with fewer than 30 employees will pay a reduced amount, which the fund will absorb. Employees at small employers will pay the same amount as those at larger employers.
As an Employer, What are My Obligations Under This Law?
Employers will have several important responsibilities in the Paid Family and Medical Leave program:
- Starting in mid-2024, most Minnesota employers will be required to submit a wage detail report, which will detail the quarterly wages received and hours worked for each employee.
- Starting in late 2025, employers must notify their employees about the program. The Paid Family and Medical Leave program will provide language for this notification.
- Starting in January 2026, employers will also be required to submit any premium payments due.
What if My Business Can’t Afford To Lose Staff To Family/Medical Leave?
According to MPR News, there’s a grant program established as part of the legislation to help small businesses pay for temporary workers. Visit the Minnesota Employment and Economic Development website for more information and updates as the date of January 1, 2026 gets closer.
Prepare for Upcoming Changes & Schedule An Appointment!
At Wood CPA, we provide tax planning and tax preparation services for federal and state taxes for individuals, corporations, partnerships, trusts, estates and nonprofits. If you’re in need of a tax accountant or have questions about any tax-related concern, schedule a meeting with us here. We look forward to working with you!
