Massachusetts PFML Contribution Rates Are Changing in 2027

Under Chapter 101 of the Acts of 2026, the split between what employers and employees fund is reversing, side for side:

For employers with fewer than 25 covered individuals, nothing changes. They send in what's withheld from employee wages and remain under no obligation to contribute an employer share, though they can still elect to cover some or all of it.

This isn't a policy shift on paid leave itself. It's a tax fix.

Under federal guidance issued in 2025, employer-funded contributions to medical leave benefits get treated as taxable wages. Massachusetts requires larger employers to fund 60% of the medical leave contribution today, which means a portion of every medical leave benefit payment currently counts as taxable income to the employee. Moving the employer's required share to family leave keeps medical leave benefit payments outside that tax treatment going forward.

The leave benefits themselves aren't changing. The wiring behind who pays what, and how it gets taxed, is.

• Don't assume the current 0.88% total carries into 2027. Watch for DFML's official rate announcement, expected by October 1, 2026.
• Once the 2027 rate is published, update payroll withholding calculations to reflect the new family/medical split, not just the total percentage.
• If you voluntarily cover part of the employee's share today, know that the tax treatment of that "pick-up" contribution follows whichever side of the ledger it lands on under the new structure.
• Flag this for whoever owns your W-2 reporting process. The taxable-wage calculation tied to medical leave benefit payments changes when the employer share moves off that line.

Greenshades customers running automated payroll tax calculations through our tax and compliance platform won't need to manually remap withholding rules once DFML publishes the 2027 rate — that's exactly the kind of structural change the system is built to take on.

Massachusetts isn't the only state recalibrating its paid leave funding model this cycle. Minnesota's paid family and medical leave program runs a comparable employer/employee split, and New Jersey recently moved on its own family leave expansion. For a fuller view of what's moved recently, see our latest Compliance Corner roundup.

Note: This information is for informational purposes only and does not constitute formal tax, legal, or compliance advice. Always consult with qualified tax advisors, legal counsel, and your organization's internal teams for guidance specific to your situation. Additional regulations may apply. For the most accurate and up-to-date information, refer to official government resources and regulatory agencies.