Is paid family leave taxable? The federal rule since Rev. Rul. 2025-4
The IRS settled the question in Revenue Ruling 2025-4: family leave from a state program is taxable, while medical leave depends on who paid the premiums. Enter your benefits to estimate the tax.
Federal income tax due on these benefits
$1,080
12.0 % of the benefits
| Withheld at 10% if you filed Form W-4V | $900 |
| Left to pay at filing time, or refunded | $180 to pay |
| Standard deduction used | $16,100 |
Tax added by the benefits to your other income, with the 2026 brackets and standard deduction (Rev. Proc. 2025-32), no credits. State income tax not included.
Compiled by Radif Partners · How the estimates are built · state laws and agency pages read October 20, 2026
Under Revenue Ruling 2025-4, effective for payments made on or after January 1, 2025, state paid family leave benefits are included in federal gross income in full. This covers bonding with a new child and caring for a seriously ill relative, in every state program. Medical leave for your own health is treated differently: it is excluded from income to the extent it is attributable to your own contributions, and taxable to the extent it comes from employer contributions that were not taxed to you. California's SDI, Rhode Island's TDI and Connecticut's program are funded by workers, so their medical benefits fall mostly or entirely on the excluded side; DC's program is funded by employers alone, so its medical benefits are taxable. 2025 was a transition year, and 2026 is the first year of full application. As with unemployment, nothing is withheld unless you ask. 8 weeks of California family leave at $1,127 a week add about $1,257 of federal tax for a single filer earning $70,000.
What the ruling says
Revenue Ruling 2025-4 works through the example of a state paid family and medical leave law (IRS, Rev. Rul. 2025-4). Family leave benefits paid by the state to an employee are included in the employee's federal gross income. Medical leave benefits are excluded under section 104(a)(3) of the tax code, except to the extent they are attributable to employer contributions that were not included in the employee's income. The ruling applies to payments made on or after January 1, 2025, with 2025 treated as a transition period for states and employers adjusting their reporting.
The logic is the one used for any disability insurance: a benefit bought with after-tax money of your own is not taxed again, a benefit bought by your employer with untaxed money is. Family leave does not qualify for that exclusion at all, because it does not compensate for your own injury or sickness.
Tax on your family leave
Federal income tax due on these benefits
$1,080
| Withheld at 10% if you filed Form W-4V | $900 |
| Left to pay at filing time, or refunded | $180 to pay |
| Standard deduction used | $16,100 |
Medical leave, program by program
The share of a medical benefit that is taxable follows the share of the premium the employer paid. The table summarizes funding as read on the agency pages; the statement your state or plan sends at year end gives the figure to use.
| Program | Who funds the premium | Medical benefit, federal tax |
|---|---|---|
| California SDI | Workers only, through the SDI deduction | Excluded |
| Rhode Island TDI | Workers only | Excluded |
| CT Paid Leave | Workers only | Excluded |
| Washington PFML | Workers pay 71.43 % of the premium | Mostly excluded |
| Paid Leave Oregon | Workers pay 60 % of the contribution | Mostly excluded |
| Colorado FAMLI | Shared evenly with employers | Half taxable |
| Minnesota Paid Leave | Employers pay at least half | At least half taxable |
| Delaware Paid Leave | Employers pay at least half | At least half taxable |
| Maine PFML | Workers pay at most half | At least half taxable |
| Massachusetts PFML | Workers pay up to 40 % of the medical part | Mostly taxable |
| DC PFL | Employers only | Taxable |
New York, New Jersey and Hawaii collect an employee deduction for disability coverage, but the employer's share of the cost was not read on the pages this site relies on, so they are left out of the table. Their benefits are excluded for the part matching the worker's deductions.
Family leave: two examples
A single parent earning $70,000 who takes 8 weeks of California Paid Family Leave receives about $9,016. Added to the wages of the rest of the year, that adds roughly $1,257 of federal income tax. In Washington, 12 weeks of bonding for someone earning $90,000 pay about $14,777, which adds about $3,251. In both cases, if nothing was withheld, the tax is due at filing time.
Withholding and forms
State programs report the benefits on Form 1099-G or a similar statement. Nothing is withheld unless you ask your program, and not every program offers it; for unemployment the voluntary rate is 10 %, set by Form W-4V (Form W-4V). If your year includes a full salary as well as the leave, a flat rate may fall short of your bracket. Raising withholding at work for the rest of the year, or paying estimated tax, covers the gap.
State income tax
The ruling is federal only. State treatment varies: New Jersey lists Family Leave Insurance benefits among the income residents do not report on the state return (NJ-1040 instructions). Washington has no individual income tax at all (Washington DOR). For other states, check the state's own instructions.
What this means for planning
Count the federal tax when you compare leave with pay. A family leave check of a given size is worth less after tax than an excluded medical benefit of the same size. For unemployment, the rule is simpler: all of it is taxable, as the unemployment tax page explains. The paid family leave comparison lists the weekly amounts before tax.