Paid medical leave can be reported on your tax return in a few different ways, depending on who paid the benefits and which tax form you received. The most common forms are a W-2, Form 1099-G, or Form 1099-MISC.
Under IRS Revenue Ruling 2025-4, family leave benefits are generally taxable for federal income tax purposes. Medical leave benefits may be fully or partially taxable depending on whether the benefits were funded by employer contributions, employee contributions, or a combination of both.
Paid Medical Leave Reported on Form W-2
If your employer included paid medical leave benefits on your Form W-2, enter the form exactly as shown.
Where to enter the W-2
- Federal
- Income
- W-2
Tax treatment
- Taxable paid leave amounts are generally already included in Box 1 wages on Form W-2.
- Required employee PFML (Paid Family and Medical Leave) contributions withheld from your paycheck are included in taxable wages.
- These contributions are generally subject to:
- Federal income tax
- Social Security tax
- Medicare tax
- Federal unemployment tax
- If your employer paid your required employee contribution on your behalf (sometimes called an employer "pick-up" contribution), that amount is generally treated as taxable wages.
What about Box 14?
Entries such as PFML, PFL, FMLA, CA SDI, or NY PFL shown in Box 14 are usually informational only. However, some states may use this information when calculating state deductions or credits.
Paid Medical Leave Reported on Form 1099-G
Many state Paid Family and Medical Leave programs issue Form 1099-G when benefits are paid directly to you.
Examples include certain PFML programs administered by states such as Washington, Massachusetts, New York, Oregon, and Rhode Island.
Where to enter the income
If your Form 1099-G reports PFML benefits, enter the amount as follows:
- Federal
- Less Common Income
- Other Income
- Other Income
Tax treatment of family leave benefits
Family leave benefits are generally taxable federally. States must report qualifying family leave benefits on an information return when reporting requirements are met.
Tax treatment of medical leave benefits
Medical leave benefits may be only partially taxable.
- The portion attributable to employer-paid PFML contributions is generally taxable income.
- The portion attributable to employee-paid PFML contributions made with after-tax dollars is generally not taxable.
- Employer "pick-up" contributions continue to be treated as taxable wages.
Because state programs can differ, some taxpayers may receive benefits that are partially taxable and partially non-taxable.
Paid Medical Leave Reported on Form 1099-MISC
Private disability insurance companies and third-party administrators may issue Form 1099-MISC for disability or medical leave payments.
Where to enter the 1099-MISC
- Federal
- Income
- 1099-MISC
- Box 3 Other Income
Tax treatment
- Most third-party disability payments are taxable because they replace lost wages.
- An important exception applies if you paid 100% of the insurance premiums with after-tax dollars. In that situation, the disability benefits may be non-taxable under federal tax rules.
Special Note for State PFML Programs
State PFML programs are different from employer-provided paid leave plans.
In some situations, a portion of state-paid medical leave benefits may not be taxable because the benefits are attributable to employee contributions made with after-tax dollars. If you receive a Form 1099-G for PFML benefits that are entirely non-taxable under federal rules, do not enter those amounts on your return.
If you're unsure whether your PFML benefits are taxable, review the information provided with your Form 1099-G or contact the state program administrator for a breakdown between employer-funded and employee-funded benefits.