Paid Family and Medical leave payroll tax will be 37% higher than when passed last year

In May last year, I wrote that nobody really knows how much Minnesota’s Paid Family and Medical leave (PFML) scheme is going to cost, with the estimated costs of the program based on assumptions of dubious realism. In October, I wrote that a report commissioned by the state’s own Department of Employment and Economic Development (DEED) found that the PFML payroll tax burden will have to increase by 23% in just four years.

And yet, with the scheme unable to cover its current assumed commitments, legislators are expanding those commitments yet further.

The National Federation of Independent Business (NFIB) writes:

A proposal being fast-tracked at the Minnesota Legislature makes several modifications to the Paid Leave Mandate, which goes into effect on January 1, 2026.

Most significantly, the Minnesota Senate adopted an amendment to Senate File 5430 that will allow applicants to receive payment during the first week of Paid Leave beginning in the second year of the program. The Minnesota House Ways & Means Committee is poised to adopt identical language later this morning.

This change will cost taxpayers an extra $300 million per year in 2027.

As a result, the Paid Family Medical Leave Tax will rise to 0.96% in 2027, a 37% increase over the Walz Administration’s projected Paid Leave Tax rate.

A poll in February found that:

…61% of respondents agree with the enactment of a paid family and medical leave scheme funded by a new payroll tax. It remains to be seen how this support holds up once people realize that the taxes necessary to fund the program are going to increase sharply.

As I wrote last October:

Voting for goodies is always the fun part. It is never as much fun once you start paying for them.