On December 19, 2025, the IRS issued Notice 2026-6, extending the transition period for federal tax and reporting requirements related to State Paid Family and Medical Leave (PFML) programs to calendar year 2027.
By way of background, numerous states have implemented their own state-mandatory PFML programs to provide partial wage replacement for eligible employees who need to take time off from work due to an employee’s own serious health condition or disability, or to care for a family member with a serious health condition. The IRS had previously issued guidance (Rev. Proc. 2025-4) regarding the tax treatment of state-based PFML programs (as reported in our previous article from January 2025). This guidance clarified how federal employment and income taxes should be applied to contributions and benefits under state PFML programs beginning in 2026.
In response to state and employer concerns over the implementation timeframe of the new tax requirements outlined in Rev. Proc. 2025-4, the IRS has delayed the scheduled enforcement of the new tax requirements until 2027. The IRS notice states that “calendar year 2026 will be regarded as an additional transition period for purposes of IRS enforcement and administration.” The notice further states, however, that beginning in 2026 employers must treat voluntary contribution payments employers made on behalf of employees to a State PFML program as wages for Federal employment tax purposes and report such amounts on the employee’s Form W-2, Wage and Tax Statement. These voluntary payments are also referred to as “employer pick-ups.”
Employer Takeaway
While the announcement by the IRS provides employers with additional time and flexibility regarding the taxation of PFML payments, employers with employees working in states with a PFML program will still need to comply with employer pick-up tax requirements in 2026. Employers should work with their payroll vendors to update the payroll systems to ensure accurate withholding and reporting, including with respect to employer and employee contributions and taxable benefit employer pick-ups, and for the future tax obligations taking effect in 2027.
Read more on the Extension of Transition Period to Calendar Year 2026 on IRS.gov.