Information on Minnesota Paid Leave

Minnesota Paid Leave

Effective January 1, 2026, Minnesota is implementing a paid leave program that will be administered by the State and funded through a new payroll tax. We have some of the basis information below, but encourage you to refer to the State’s website for more detailed information: https://paidleave.mn.gov/

For our payroll clients, we are working with our payroll service provider to implement the collection and reporting requirements

Paid Leave – Information for Employees

Who Qualifies?

·         Anyone who works in Minnesota (or earns at least 50% of their wages from Minnesota jobs if working in multiple states)

·         Self-employed individuals if they opt in

How is this funded?

·         Through a payroll tax at a rate of 0.88% of wages (see notes below for smaller employers)

·         Employees are responsible for half (0.44%) of the tax, however employee contributions cannot cause the employee to earn less than minimum wage

·         Employee’s share is handled as a payroll deduction, but is included in taxable wages

·         Employers may elect to pay employees’ share, but the employees’ share of the tax is still included in taxable wages even if paid the employer

What events qualify?

·         You have a serious medical condition

·         You are welcoming a new child

·         You need to care for a loved one

·         You are managing a family member’s active duty

·         You have safety concerns like domestic violence, sexual assault, or stalking

·         A health care or service provider must confirm the need for leave

Who is considered a qualifying family member?

·         Spouse or partner

·         Child (including biological, adopted, step or foster children)

·         Parent or person who raised you

·         Sibling

·         Grandchild or grandparent

·         In-laws

·         Anyone close to you who depends on you like family, even if not related by blood

How much paid leave is available each year?

·         Up to 12 weeks of medical leave for your own serious health condition

·         Up to 12 weeks of family leave

·         Medical and family leave combined cannot exceed 20 weeks

·         Leave can be taken continuously or intermittently (such as one day a week for medical appointments)

Paid Leave – Information of Employers

How are premiums paid?

·         Premiums will be paid through the Minnesota UI system – generally not requiring a separate report

·         Employees exempt from Minnesota Unemployment tax are not exempt from the paid leave tax (such as S-Corp owners and dependents of self-employed individuals), which will require separate reports

What is the tax rate?

·         The total rate is 0.88% of wages, reduced to 0.66% of wages for qualifying small employers

·         The rate is spilt between the employee share of 0.44% and the employer share of 0.44% or 0.22% for qualifying small employers. The employee contribution cannot cause the employee to earn less than minimum wage

How is the employee share collected?

·         The employee share can either be deducted from the employee’s pay (see next bullet), or paid by the employer

·         The employer is required to cover the employee premium for employees who are paid minimum wage

W-2 Tax Reporting

·         The employee portion of the tax is included in taxable wages, and subject to Social Security and Medicare tax, whether the premium is paid by the employer or deducted from employees’ paychecks

More information for employers: https://mn.gov/deed/paidleave/employers/