Taxation Guidance Is Finally Here for NY Paid Family Leave

August 31, 2017
Find answers to your top taxation questions here, including withholding and reporting.

The state of New York communicated Paid Family Leave rates and initial payroll deduction guidance on June 1, 2017. Now, after further review, the New York Department of Taxation and Finance has provided important guidance regarding payroll deduction and PFL taxation.

You'll find answers to your top taxation questions below:

  • Employee-paid premiums should be deducted post-tax — not pre-tax.
  • Regardless of how premiums are paid, benefits paid to employees will be taxable non-wage income that must be included in federal gross income.
  • Taxes will not automatically be withheld from benefits; employees can request voluntary tax withholding.
    • At this time, it appears that employees can choose to withhold a flat 10 percent of their benefit for federal taxes and a flat 2.5 percent of their benefit for state taxes.
  • Employers should report employee payroll contributions on Form W-2 using Box 14: State Disability Insurance Taxes Withheld.

The state may provide further guidance in the future. We’ll post updates here as we receive them. Keep checking back!