Background

Minnesota Paid Family and Medical Leave (PFML) is a state-mandated program providing paid leave to full- and part-time employees for qualifying family or medical reasons. All employers must participate, regardless of size or unemployment insurance exemptions.

Exceptions: - Employees of tribal nations - Federal government employees - Self-employed individuals who opt to provide their own coverage

💡 IRS Revenue Ruling 2025-4: Any excess employer PFML contributions are considered an employer “pick-up” and must be included in the employee’s taxable wages and reported on Form W-2 starting in 2026.

For more information, visit the MN PFML website.

Important Date: January 2026

Premium collection begins at a total rate of 0.88% for most employers (or 0.66% for qualifying small employers with fewer than 30 full-time employees). Employers must contribute at least 50% of the premium and may cover up to 100%. The remaining portion—up to 50%—can be deducted from employee wages.

Minnesota PFML Premium Rates (Effective January 2026)

AccountEdge Setup

Employee Responsibility

If employees are contributing to PFML, this is handled via an Employee Deduction.

Set Up Minnesota PFML Employee Deduction: 

1. Go to Payroll > Payroll Categories > Deductions 

2. Select PFML - MN EE Contrib and click Edit - If it does not exist, click New and enter the name: PFML - MN EE Contrib 

3. Configure the deduction:

• Type: PFML – Paid Family Medical Leave
• State: MN - Type of Deduction: Percent of Gross Wages
• Rate: 0.44% (2026 rate)
• Deduction Limit: $816.20 annually 

4. Click the Employee button to apply to all Minnesota employees.

Employer Responsibility

If the employer chooses to cover PFML for employeesa:

The PFML - MN Employer Expense is automatically created with the correct wage limit.

If covering some or all of the employee share—or if a small employer—update the PFML rate to the correct percent.

Set Up Minnesota PFML Employer Expense:

1. Go to Payroll > Payroll Categories > Expenses 

2. Select PFML - MN Employer Expense and click Edit 

3. Update the PFML rate: 

• Full employer coverage: 0.88% (or 0.66% for small employers)
• Split with employees: 0.44% (or 0.22% for small employers) 

4. Set the wage limit: $185,500 (2026) 

5. Click Employee to apply to all Minnesota employees.