New York State’s New Paid Family Leave Program

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The New York State Department of Taxation and Finance, Notice 17-12

The State’s new Paid Family Leave program has tax implications for New York employees, employers, and insurance carriers, including self-insured employers, employer plans, approved third-party insurers, and the State Insurance Fund. The Department of Taxation and Finance has reviewed the New York statute, implementing regulations, and applicable laws, case law and federal guidance and has consulted with the Internal Revenue Service regarding the appropriate tax treatment of family leave contributions and benefits under the New York program.

Based upon this review and consultation, the following guidance:
• 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 the State Insurance Fund on Form 1099-G and by all other payers on Form 1099-MISC

The department hopes this guidance is helpful to you as you move forward with implementation of this new program. However, it is the responsibility of each employee and employer/insurance carrier to consult with its tax advisor.

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