Minnesota Paid Family Leave

Starting January 1, 2026, Minnesota requires that all employers withhold premiums from employees' checks for Family and Medical Leave Insurance (FAMLI) unless the employer has an 'Approved Private Plan'.

Employers and their employees are both responsible for funding the program and may split the cost 50/50. The premiums are 0.88% for large employers and  0.66% for employers with less than 30 employees. The employee portion is 0.44% in all cases. An employer may reimburse employees for some or all of their portion of the premium.

You will have to select MN as the Default FamLv State on the Company Payroll Defaults tab and set up a Family Leave Employee payroll item in each company any time before the first paycheck in 2026. The employee rate has been set up by us on the Fam Emp tab in Setup>Payroll Taxes. This is a global setting and if you change this rate you will be changing it for all employees for all clients.

Select Setup>Company Information and select the Company Payroll Defaults tab as shown below.

Select MN from the list as the Default FamLv State.

Go to Setup>Payroll Items and create a Family Leave Employee item as shown below.

To set up the employer portion of the premium:

1. Go to Setup>Payroll Taxes and enter the rate on the Fam Co. tab as shown below.
   
   
    
2. Go to Setup>Payroll Items and create a new  Family Leave Company item as shown below.
   
   

Do NOT add these items to the Payroll Templates

If the employer is paying the employee share of the tax for Payroll Check writing:

Set up an Other Income item as shown below to reimburse the employee and add it to the bottom grid of the payroll template(s).

Note: If the employer is reimbursing for something less than the total premium, adjust the Amount or % field appropriately. For example, if the employer is only reimbursing for 1/2 of the premium, enter .5 in the rate as shown below.

If the employer is paying the employee share of the tax for After-the-Fact Payroll:

Enter the combined rate on the FamCo tab in Setup>Payroll Taxes.  Make sure that State Default ATF Tax mode is As Entered so the system does not reduce state Withholding by the amount of the fam leave tax.