Yes, PFML benefits are taxable in Massachusetts, but not always in full. Family leave benefits are fully taxable at both the federal and state levels. Medical leave benefits are split: the portion funded by your employer’s contributions is taxable, and the portion funded by your own after-tax paycheck deductions is not. The IRS set out these rules in Revenue Ruling 2025-4, published in January 2025, and Massachusetts generally follows the same framework.1Internal Revenue Service. Revenue Ruling 2025-4
Why Family Leave and Medical Leave Are Taxed Differently
The tax treatment tracks who paid the contributions. Family leave contributions can be deducted entirely from your wages, so the resulting benefits are treated as ordinary taxable income. Medical leave contributions are split. For employers with 25 or more covered individuals, the law requires the employer to cover at least 60% of the medical leave contribution and lets the employer deduct up to 40% from your paycheck.2Mass.gov. 2026 Rate Sheet for Employers With 25 or More Covered Individuals
That split carries over to your benefit check. The employer-funded share of your medical leave benefit is included in gross income and treated as wages for federal employment tax purposes, similar to third-party sick pay. The employee-funded share is excluded from gross income, the same way the IRS treats benefits from an accident or health plan you paid for yourself with after-tax dollars.1Internal Revenue Service. Revenue Ruling 2025-4
Family leave benefits, by contrast, aren’t treated as wages for federal employment tax purposes, so no Social Security or Medicare tax comes out. The state reports them on Form 1099-G if they total $600 or more in the year.1Internal Revenue Service. Revenue Ruling 2025-4
What Your 1099-G Actually Shows
In January, the Department of Family and Medical Leave mails a Form 1099-G to everyone who received PFML benefits the prior year. You can also download it by logging into your PFML account.3Mass.gov. Downloading Your PFML 1099-G Tax Form
Box 1 is the number that goes on your return, and it does not always match what hit your bank account. For family leave, Box 1 reflects the full benefit. For medical leave, Box 1 reports only the taxable portion. If your employer has 25 or more covered individuals, the taxable portion is 60% of the medical leave benefit, tracking the employer’s minimum contribution share. If your employer has fewer than 25 covered individuals, no part of the medical leave benefit is treated as taxable for withholding purposes.4Mass.gov. Taxes on Paid Family and Medical Leave (PFML) Benefits
How Massachusetts Treats PFML on the State Return
Massachusetts generally follows the Internal Revenue Code as amended and in effect on January 1, 2024, for personal income tax purposes.5Massachusetts Department of Revenue. Differences Between MA and Federal Tax Law for Personal Income Because Revenue Ruling 2025-4 came out in January 2025, there is a technical question about whether Massachusetts has formally conformed to that specific guidance. In practice, the DFML already treats benefits as taxable and issues 1099-G forms reflecting the taxable amount, and it has said it is developing further guidance. For most filers, the practical answer is straightforward: the same taxable amount shown in Box 1 flows onto your Massachusetts return.
Where to Report It on Your Return
On your federal return, put the taxable amount from Box 1 on Schedule 1 (Form 1040), line 8z, under “Other income,” and label it “MA PFML” or similar. That amount then flows through to Form 1040.6Internal Revenue Service. Instructions for Form 1040 The same figure is included in your Massachusetts taxable income. Most tax software handles both automatically once you enter the 1099-G.
Withholding During Your Leave
You can elect to have income tax withheld when you apply for benefits. The standard election is 5% for Massachusetts and 10% for federal. There’s also an option for 5% state plus a custom federal dollar amount based on IRS Form W-4S. To change your election later, call the DFML contact center at (833) 344-7365.4Mass.gov. Taxes on Paid Family and Medical Leave (PFML) Benefits
Withholding applies only to the taxable portion of your benefit. For medical leave at a larger employer, that means withholding runs on 60% of the payment. For employees of employers with fewer than 25 covered individuals, no income tax is withheld on medical leave, regardless of what you elect.4Mass.gov. Taxes on Paid Family and Medical Leave (PFML) Benefits
If You Skip Withholding, Watch for Estimated Tax
Without withholding, you may need to make estimated payments to avoid an underpayment penalty. Federally, you generally avoid the penalty if you owe less than $1,000 at filing, or if you’ve paid at least 90% of the current year’s tax or 100% of the prior year’s tax (110% if your prior-year adjusted gross income exceeded $150,000, or $75,000 if married filing separately).7Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty
Massachusetts requires estimated payments if the expected tax due on income not subject to withholding exceeds $400, and you need to pay at least 80% of your annual state tax liability before filing.8Massachusetts Department of Revenue. Massachusetts DOR Estimated Tax Payments If you’re back at work and want to skip the estimated-payment paperwork, filing an updated W-4 with your employer to increase paycheck withholding can cover the PFML income instead.
Benefits Paid Through a Private Plan
Some Massachusetts employers use approved private plans rather than the state program. The tax principles are the same, but the reporting can look different: private plan benefits functioning as third-party sick pay may show up on a W-2 rather than a 1099-G, depending on the arrangement. The DFML has noted that its tax guidance does not address private or self-insured plans, so if you’re covered by one, ask your employer or the insurer how your benefits will be reported and what withholding options you have.