New York Paid Family Leave

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Are Paid Family Leave benefits taxable?

In August of 2017, New York state provided the following tax guidance for PFL benefits:

  • 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.
  • Premiums will be deducted from employees’ after-tax wages.
  • Employers should report employee contributions on Form W-2 using Box 14 – State disability insurance taxes withheld.
  • Benefits should be reported by insurers on Form 1099-MISC.    

    Based on these guidelines, Lincoln will issue benefits as non-wage income and will report benefits on a 1099-MISC issued directly to claimants. Benefits will be subject to income taxes, but FICA will not apply.
Are public sector employers required to provide Paid Family Leave?
  • The state of New York defines public employers as the state; a political subdivision of the state; a public authority; or any other governmental agency or instrumentality thereof. These types of employers are not required to provide PFL benefits to their employees under New York’s regulations. Public employers that presently offer NY state disability (DBL) coverage to their New York workers should notify their carrier of their intent to provide PFL benefits to those employees. If they elect to offer PFL, they are also required to complete one of the state’s Employer’s Applications for Voluntary Coverage. Visit our State Resources page to learn more about these applications.
What is the maximum annual premium for employees?
  • The 2018 annualized maximum wage basis for PFL is $67,908 ($1,305.92 x 52 weeks). If an employee earns equal to or greater than this salary his or her annual premium will be capped at $85.56 ($67,908 x 0.126%=$85.56) If that employee is paid on a weekly basis, his or her weekly deduction would be approximately $1.65 ($85.56/52 weeks).
  • For an employee earning less than the average weekly wage, annual premium will be equal to 0.126% of the employee’s wages throughout the year. As an example, annual premium for an employee earning $40,000 per year would be approximately $50.40. (0.126% x 40,000). If paid on a weekly basis, the employee’s weekly deduction would be approximately $0.97 ($40,000/52=$769.23 x 0.126%=$0.97).

In New York, insurance products (policy series GL111, GL3001) are issued by Lincoln Life & Annuity Company of New York, a Lincoln Financial Group® company. Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. Affiliates are separately responsible for their own financial and contractual obligations. Limitations and exclusions apply.