By Massachusetts has updated its paid family and medical leave contribution allocation for 2027, shifting employer contributions from medical leave to family leave. The change follows Chapter 101 of the Acts of 2026 and is designed to mitigate the impact of IRS guidance on PFML benefit taxation, according to HRMorning.
The new allocation takes effect January 1, 2027. Payroll teams must apply the updated split to wages earned on or after that date. Employers with 25 or more covered individuals will continue to pay a combined contribution of 0.88% of eligible wages. Employers with fewer than 25 covered individuals will have an effective contribution rate of 0.46% and will not pay the 0.42% employer share.
What the 2027 allocation actually changes
The reallocation moves the employer share from medical leave to family leave. Under the new structure, employers with 25 or more covered individuals contribute at least 0.42% toward family leave and may withhold up to 0.28% from employees for family leave. For medical leave, those employers may withhold the full 0.18% contribution from employees.
This is a meaningful shift from the prior structure, where the family leave contribution was entirely employee-funded and employers paid the medical leave employer share. The combined rate of 0.88% for larger employers stays the same, but the internal allocation between family and medical leave changes who bears which portion.
For employers with fewer than 25 covered individuals, the effective rate remains 0.46%. These small employers do not pay the 0.42% employer share, but they must still remit the employee portion.
How the split works in payroll practice
The Massachusetts PFML program is administered by the Department of Family and Medical Leave under the Executive Office of Labor and Workforce Development. Employers remit contributions quarterly, and the contribution rate and taxable wage base are set annually by the Department.
The 2027 change does not alter the quarterly filing cadence, but it does require payroll system updates before the first payroll run of the new year. Employers should verify that their payroll provider or internal system can handle separate family leave and medical leave withholding lines with different employer and employee percentages.
Employers may choose to cover the employee share as a benefit. That option remains available under the new allocation. Employers with approved private plan exemptions should confirm with the Department whether the 2027 allocation change affects their exemption terms or reporting requirements.
What the official guidance does not yet show
The mass.gov PFML FAQ page, as of the most recent available version, does not mention the 2027 contribution allocation change. It still describes the family leave contribution as entirely employee-funded and the medical leave contribution as carrying an employer share for employers with 25 or more covered individuals.
That means employers should treat the HRMorning report as the current signal of the change and monitor the Department of Family and Medical Leave for updated official guidance. The Department has not yet published a 2027-specific rate sheet or allocation table in the extracted FAQ content.
The taxable wage base for 2027 has not been published in the available sources. Employers should not assume the 2026 wage base carries forward. The Department sets the wage base annually, and the 2027 figure will need to be confirmed before calculating per-employee deductions.
Steps for payroll and HR teams before January 1
Payroll teams should prepare for the transition in stages. First, confirm the employer size classification based on covered individuals, since the 25-employee threshold determines whether the employer share applies. Second, update payroll deduction codes to reflect the new family leave and medical leave percentages. Third, communicate the change to employees before the first paycheck of 2027, since employee take-home pay may shift even if the combined rate stays the same.
For an employee earning $1,000 in eligible wages per week at a larger employer, the combined 0.88% contribution equals $8.80. The new allocation means the employer pays at least $4.20 toward family leave, the employee may pay up to $2.80 toward family leave, and the employee may pay up to $1.80 toward medical leave. The employee’s total withholding under the maximum split would be $4.60, compared with a different internal split under the prior structure.
Small employers with fewer than 25 covered individuals should verify that their payroll system does not deduct the 0.42% employer share. Their employees still contribute through withholding, and the employer must remit those amounts quarterly.
Employers should also review whether the change affects their private plan exemption documentation. The Department permits private plan exemptions when the plan provides benefits at least equal to the state plan. A change in the state contribution allocation does not automatically change private plan benefit requirements, but employers should confirm their plan documents remain compliant.
The Department of Family and Medical Leave remains the authoritative source for contribution rates, wage base figures, and filing requirements. Employers with specific payroll questions should contact the Department directly before making system changes.
Sources: HRMorning
Photo: Boston State House of Massachusetts by Stefan Schulze (Audience), CC BY-SA 3.0
