New York Paid Family Leave (PFL) is a new benefit program that offers paid leave to New York employees while they bond with a new child, care for a close relative with a serious health condition, or when an employee’s family member is called to active military service.  PFL will phase in over a period of 4 years and it takes effect on January 1, 2018.  For more information on New York Paid Family Leave, please see our previous New York Paid Family Leave Update.

The New York State Department of Taxation and Finance recently released tax guidance relating to New York Paid Family Leave benefits, as these benefits will have tax implications for New York employees, employers, and insurance carriers.


Action Item:

Employers and their payroll staff should be aware of the following New York tax 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.


Please note: it is the responsibility of each employee and employer/insurance carrier to consult with its tax advisor regarding all potential tax issues.


Helpful Links:

New York State Department of Taxation and Finance Notice

New York Paid Family Leave Update

New York Paid Family Leave Website


The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog.

Joanna Castillo– Joanna is the Client Compliance Manager for Sequoia, where she works with our clients to optimize and streamline benefits compliance. In her free time, Joanna enjoys live music, college football, travel, and walking her dog in Golden Gate Park.