Includes transition relief for state paid medical leave benefits paid made during calendar year 2025
The IRS today released Rev. Rul. 2025-4 providing guidance on the income and employment tax treatment of contributions and benefits paid in certain situations under a state paid family and medical leave program, as well as the related reporting requirements.
As explained in a related IRS release—IR-2025-16 (January 26, 2025)—Rev. Rul. 2025-4 responds to requests to clarify the federal tax treatment of state paid leave programs that help pay employees who cannot work because of non-occupational injuries to themselves or family members, as well as sickness and disabilities. The revenue ruling generally provides that:
In addition, Rev. Rul. 2025-4 provides transition relief to the District of Columbia, states, and employers from certain withholding, payment, and information reporting requirements for state paid medical leave benefits paid made during calendar year 2025.
The IRS is soliciting comments on additional situations and aspects of state paid family and medical leave programs that are not covered in Rev. Rul. 2025-4 electronically via the Federal eRulemaking Portal at https://www.regulations.gov.