The FLI tax is a state payroll deduction that funds a paid family leave insurance program. If you work in one of the states that runs one, a small percentage of your wages is withheld and pooled into a state-managed insurance fund. When a qualifying event happens later, such as a new baby, a seriously ill family member, or your own serious health condition, you can draw partial wage replacement from that pool. Thirteen states and the District of Columbia currently run mandatory programs, with total 2026 contribution rates ranging from roughly 0.23% to 1.3% of covered wages.
Which States Take an FLI Deduction
As of 2026, the states with mandatory paid family and medical leave programs are California, Colorado, Connecticut, Delaware, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, Oregon, Rhode Island, and Washington, along with the District of Columbia.1U.S. Department of Labor. Paid Leave If your paystub is from a job in one of these places, the FLI line is not something you opted into.
Most of these states use a social insurance model: pooled payroll taxes flow into a state fund, and the state pays benefits directly. New York is the exception, using a mandatory private insurance system where employers buy paid family leave coverage from approved carriers. New Hampshire and Vermont run voluntary programs that employers and individuals can join but aren’t required to.
Some states also let employers apply for an exemption from the state program if they offer an approved private plan with benefits at least as generous. The private plan can’t cost workers more than they would pay into the state program, and the employer must provide equivalent job protection and benefit duration. That’s why your paystub line item may not match a friend’s at another company in the same state.
How the Deduction Is Calculated
Three variables determine what comes out of your paycheck: the contribution rate, the wage base, and who pays.
The rate is a percentage of your gross wages, set by the state each year based on program costs and fund health. In 2026, total rates across states range from about 0.23% to 1.3% of covered wages. A worker earning $60,000 at a 0.5% combined rate would see roughly $300 deducted annually, or about $12 per biweekly paycheck. At the top of the range, that same worker could pay closer to $780 a year.
The wage base caps the earnings subject to the tax. Several states tie their cap to the Social Security wage base, which is $184,500 in 2026.2Social Security Administration. Contribution and Benefit Base Others set their own ceiling, and some apply the tax to all covered wages with no cap. Once your year-to-date earnings clear the wage base, the FLI line disappears from your paychecks for the rest of the year.
Funding responsibility varies. In some states employees pay the full cost. In others employers share the contribution or cover all of it. A few states split it by employer size, exempting small businesses from the employer portion while still requiring the employee share.
What You Can Claim Benefits For
Every state sets its own eligibility rules, but the general framework is consistent. You need to have earned enough wages or worked enough hours during a lookback period, often called the base period, before your leave starts. That period typically spans the 12 months before your claim. Minimum earnings thresholds range from a few hundred dollars to over $2,000 depending on the state.
Qualifying events fall into four broad categories:
- Bonding with a new child after birth, adoption, or foster placement, usually within the first 12 months.
- Caring for a spouse, parent, child, or other close family member with a serious health condition.
- Your own serious health condition that prevents you from working.
- Qualifying needs arising from a family member’s active-duty military deployment or caring for an injured service member.
You file the claim with your state’s designated agency, not your employer, and most states impose deadlines. Missing them can delay or forfeit benefits. Claims require documentation: medical certification from a healthcare provider for medical or caregiving claims, or proof of relationship for bonding claims.
Many states impose a one-week waiting period before benefits begin. You must take some leave during that week, but you won’t be paid for it. The waiting period usually applies only once per claim year and often doesn’t reduce your total available weeks. Several states waive it entirely for childbirth or military exigency leave.
How Much the Benefit Pays and for How Long
Benefits replace a percentage of your normal wages, not all of them. Most states use a tiered formula: a higher replacement rate on wages below a certain threshold and a lower rate above it, so lower-income workers get a larger share of their pay replaced.
Every state caps the weekly benefit at a maximum dollar amount. In 2026, those caps range from roughly $900 to over $1,600 per week. Massachusetts, for example, sets its 2026 maximum at $1,230.39, calculated as 64% of the state average weekly wage.
Maximum duration also varies. Most states offer 12 weeks for a single qualifying event, but the range runs from as few as 7 weeks in one state to as many as 26 weeks of combined family and medical leave in Massachusetts. When someone needs both medical and family leave in the same year, some states allow an extended combined duration of 16 to 20 weeks.
Most programs allow intermittent leave, so you can use benefits in smaller blocks rather than taking all your weeks consecutively. If you need two days a week off for ongoing treatment, you can typically draw partial weekly benefits for those days while continuing to work the rest.
How FLI Benefits Are Taxed
The IRS clarified the federal rules in Revenue Ruling 2025-4, and the answer depends on which kind of leave you take.
Family leave benefits, meaning payments for bonding with a child or caring for a sick relative, are fully includable in your federal gross income. They are not treated as wages for Social Security, Medicare, or federal unemployment tax, so no additional FICA is withheld from them.3Internal Revenue Service. Revenue Ruling 2025-4 – State Paid Family and Medical Leave Programs
Medical leave benefits follow a split rule based on who funded the premium. The portion attributable to your own payroll contributions is excluded from gross income under the same tax code section that covers accident and health insurance you pay for yourself. The portion attributable to your employer’s contributions is taxable and treated as third-party sick pay for employment tax purposes.3Internal Revenue Service. Revenue Ruling 2025-4 – State Paid Family and Medical Leave Programs In states where employees pay the entire premium, all medical leave benefits would be tax-free at the federal level.
Starting with 2026 payments, states report family leave benefits on Form 1099-G using a new Box 10 designated for this purpose.4Internal Revenue Service. Instructions for Form 1099-G (Rev. December 2026) – Certain Government Payments You’ll receive one in early 2027 if your benefits total $600 or more. You can request voluntary federal withholding from your benefit payments to avoid a surprise bill. State income tax treatment varies: some states exempt their own paid leave benefits, others tax them.
FLI Money Doesn’t Automatically Protect Your Job
This is the piece most workers miss. FLI provides income during leave, but it doesn’t necessarily protect the job you’re returning to. In some states the paid leave statute includes its own job-protection guarantee. In others you rely entirely on the federal Family and Medical Leave Act (FMLA) or a separate state employment law to ensure you can come back to the same or equivalent position.5U.S. Department of Labor. Whats the Difference – Paid Sick Leave, FMLA, and Paid Family and Medical Leave
FMLA gives eligible employees up to 12 weeks of unpaid, job-protected leave per year and requires employers to maintain group health benefits during that time.6U.S. Department of Labor. Fact Sheet 28 – The Family and Medical Leave Act But FMLA eligibility is narrower than most state FLI programs. You need at least 12 months of tenure, 1,250 hours worked in the previous year, and a worksite where your employer has 50 or more employees within 75 miles. If you qualify for FLI benefits but not FMLA, and your state’s paid leave law doesn’t include its own job protection, your job may not be guaranteed when you return. Confirm both before you file.
Retaliating against an employee for requesting or using paid family leave is prohibited under both FMLA and state paid leave laws. Retaliation includes termination, demotion, and using an employee’s leave request as a negative factor in hiring or promotion decisions.7U.S. Department of Labor. Protection for Individuals Under the FMLA
How Other Benefits Interact With FLI
Short-term disability and FLI generally cannot be collected at the same time, but they can be used in sequence. A common pattern after giving birth: short-term disability during physical recovery, then paid family leave for bonding. The combined total of disability and family leave weeks is usually capped within a 52-week period.
Workers collecting full workers’ compensation benefits for total disability generally can’t receive FLI at the same time. Someone on partial workers’ compensation with reduced earnings may still qualify.
Employer-provided paid time off is trickier. Some states let employers require you to use accrued PTO concurrently with state benefits. Others let you top off the state benefit with employer-paid leave to get closer to a full paycheck. Under FMLA, employers can require accrued paid leave to run concurrently with the 12-week job-protected period.6U.S. Department of Labor. Fact Sheet 28 – The Family and Medical Leave Act
What If You’re Self-Employed
Sole proprietors, freelancers, and independent contractors are generally not required to participate. Several states with mandatory programs let self-employed workers opt in voluntarily.
The trade-off is commitment. You typically pay premiums for an initial period of one to three years before you can withdraw. You must report earnings quarterly, even in quarters with zero income, and you’ll need to meet minimum hours or earnings thresholds before you can actually claim benefits. In at least one state, opting in more than six months after starting your business triggers a two-year waiting period before you can draw benefits.
Self-employed workers who opt in pay the employee share of the premium on their reported self-employment income. Since you’re both employer and employee, no one else is contributing on your behalf unless you’ve structured your business to do so.