Minnesota Paid Family and Medical Leave (PFML) is a state-mandated program providing paid leave to full- and part-time employees for qualifying family or medical reasons. All employers must participate, regardless of size or unemployment insurance exemptions.

Exceptions: - Employees of tribal nations - Federal government employees - Self-employed individuals who opt to provide their own coverage

💡 IRS Revenue Ruling 2025-4: Any excess employer PFML contributions are considered an employer “pick-up” and must be included in the employee’s taxable wages and reported on Form W-2 starting in 2026.

For more information, visit the MN PFML website.

Premium collection begins at a total rate of 0.88% for most employers (or 0.66% for qualifying small employers with fewer than 30 full-time employees). Employers must contribute at least 50% of the premium and may cover up to 100%. The remaining portion—up to 50%—can be deducted from employee wages.

If employees are contributing to PFML, this is handled via an Employee Deduction.

Set Up Minnesota PFML Employee Deduction:

1. Go to Payroll > Payroll Categories > Deductions

2. Select PFML - MN EE Contrib and click Edit - If it does not exist, click New and enter the name: PFML - MN EE Contrib

3. Configure the deduction:

4. Click the Employee button to apply to all Minnesota employees.

If the employer chooses to cover PFML for employeesa:

The PFML - MN Employer Expense is automatically created with the correct wage limit.

If covering some or all of the employee share—or if a small employer—update the PFML rate to the correct percent.

Set Up Minnesota PFML Employer Expense:

1. Go to Payroll > Payroll Categories > Expenses

2. Select PFML - MN Employer Expense and click Edit

3. Update the PFML rate:

4. Set the wage limit: $185,500 (2026)

5. Click Employee to apply to all Minnesota employees.