The New York PFL tax is the payroll deduction that funds the state’s Paid Family Leave program. In 2026, it’s 0.432% of your gross wages each pay period, capped at $411.91 for the year.1New York State government. New York Paid Family Leave Updates for 2026 The money comes out of your paycheck after income tax is calculated, so it doesn’t lower your taxable wages. If you ever draw benefits from the program, those payments are taxable on your federal return but not by New York State.
The 2026 Rate and Annual Cap
The New York Department of Financial Services resets the PFL contribution rate every year based on the projected cost of coverage.2New York State government. Cost and Deductions For 2026 the rate is 0.432% of gross wages per pay period, up from 0.388% in 2025 — roughly an 11% increase.3Department of Financial Services. Decision on Premium Rate for Paid Family Leave Benefits for Coverage Beginning January 1, 2026
The cap is tied to the New York State Average Weekly Wage (NYSAWW), which is $1,833.63 for 2026. Earn at or above that, and your contribution tops out at $411.91 for the year no matter how much more you make.1New York State government. New York Paid Family Leave Updates for 2026 Earn below the NYSAWW, and the percentage simply applies to your actual wages, so your yearly total will be less than the cap.
Under state law, the Superintendent of Financial Services sets this rate using actuarial analysis of expected claims, with the principle that employees fund the full cost of PFL coverage.4New York State Senate. New York Workers Compensation Law WKC 209 – Contribution of Employees for Disability and Family Leave Benefits Your employer collects and remits the money through its insurance carrier but puts in none of its own.2New York State government. Cost and Deductions
What the Deduction Looks Like on Your Paycheck
Run your gross pay for the period times 0.00432 and you have your deduction. A couple of examples:
- At $800 per week, you’ll see about $3.46 withheld each week, totaling roughly $179.92 across a full year.
- At $2,500 per week, you’ll see $10.80 withheld each week until your year-to-date contributions reach $411.91, at which point your employer stops withholding for the rest of the calendar year.
Hourly employees, salaried employees, and part-timers all use the same percentage. There’s no exemption for a particular wage band or income level inside the covered group.
How It Affects Your Tax Return
PFL is withheld on an after-tax basis. Unlike a 401(k) contribution, it doesn’t reduce the wages your federal income tax is calculated on, and you can’t deduct it on your federal return.5Department of Taxation and Finance. New York State Paid Family Leave
Your employer reports the full year’s PFL withholding on your W-2 in Box 14, labeled as state disability insurance taxes withheld.5Department of Taxation and Finance. New York State Paid Family Leave Box 14 is informational. It won’t change the math on your return; it’s there as a record of what you paid in.
Taxes If You Actually Take PFL
The tax picture flips when you file a claim and start receiving benefits. PFL benefit payments are fully taxable as federal income. The IRS treats them as non-wage income, so they’re subject to income tax but not to Social Security or Medicare withholding.5Department of Taxation and Finance. New York State Paid Family Leave New York State does not tax PFL benefits.
Here’s where people get caught. Your insurance carrier does not automatically withhold federal income tax from your benefit payments.5Department of Taxation and Finance. New York State Paid Family Leave Take several weeks of leave at the full benefit rate and you can end up owing a meaningful amount at filing time. You have two ways to handle it. You can ask your carrier to withhold 10% of each benefit payment for federal income tax when you submit your claim, or you can make quarterly estimated tax payments during your leave period.
After the end of the year, the entity that paid your benefits sends you a Form 1099-G or Form 1099-MISC showing the total amount paid. That’s the figure you use on your federal return.5Department of Taxation and Finance. New York State Paid Family Leave
Who the PFL Tax Applies To
Nearly all private-sector employees working in New York are covered, regardless of where they live. If you commute into New York from New Jersey or Connecticut, the deduction still comes out of your pay.6New York State government. Eligibility Public-sector employees are covered only if their employer voluntarily opts in.
Coverage, and therefore the deduction, applies based on your work schedule:
- If you work 20 or more hours per week, you become eligible for benefits after 26 consecutive weeks with your employer.
- If you work fewer than 20 hours per week, you become eligible after 175 days worked, which don’t need to be consecutive.6New York State government. Eligibility
Payroll deductions generally start on your first day of work, even though your benefit eligibility doesn’t kick in until you hit the threshold. Once you qualify, you stay qualified as long as you work for that employer. Change jobs and the clock resets.
When You Can Waive the Deduction
You can only waive PFL — and stop the payroll deduction — if your schedule means you’ll never work long enough at that job to become eligible for benefits. For instance, if you work 20 or more hours per week but you know you won’t be there for 26 consecutive weeks, you can file a waiver with your employer and skip the contributions.6New York State government. Eligibility If your schedule later changes so that you would qualify, the waiver is revoked and your employer can collect retroactive contributions back to your date of hire.
For everyone else in a covered job, the deduction is mandatory. You cannot opt out simply because you don’t expect to use the benefit.
Self-Employed Workers
If you’re self-employed in New York, there’s no automatic PFL tax on your earnings, but you can voluntarily opt in. A sole operator with no employees opts in by purchasing a combined PFL and disability insurance policy; PFL coverage is not sold on its own. A business owner with employees submits a voluntary coverage form to the Workers’ Compensation Board and notifies the insurance carrier.7New York State government. Self-Employed Individuals Once you opt in, you pay contributions on the same percentage-of-wages basis as employees.