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Set up Minnesota Paid Family and Medical Leave

by Intuit•126• Updated 5 days ago

Minnesota's Paid Family and Medical Leave (PFML) program is a new state-required tax that starts January 1, 2026. It gives employees paid time off for family and medical reasons. You can set up and manage these tax contributions for your covered employees in QuickBooks Payroll to help you stay compliant.

How the program works

The PFML program is managed through Minnesota's unemployment system. This makes reporting and payments simpler by using a familiar state portal. 

  • Full unemployment coverage: If you pay state unemployment for all of your employees, you don't need to register again. A new PFML section will appear in your current account.
  • No unemployment coverage: If you don't pay state unemployment for any employees, you must register for a new "Paid Leave Only" account to manage PFML.
  • Partial unemployment coverage: If only some of your employees are covered by unemployment, you’ll need two separate accounts.
    • Joint UI/Paid Leave account: Use this account to report your employees who are covered by UI and Paid Leave. You don't need to register again for this one. You'll see a new section called PFML in this account.
    • Paid-Leave-ONLY account: Use this account to report your employees who aren't covered by UI but are covered by Paid Leave. You'll need to register for this account.

Who is covered?

  • Covered employees: Any employee who works in Minnesota for 50% or more of the year is covered by PFML.
  • Non-covered people: Independent contractors, self-employed people, and tribal nations' workers, aren't covered by this program, but can opt in. Federal government employees, seasonal hospitality employees who have been notified by their employer they’re exempt, and railroad employees aren’t covered and can’t opt in. 

Contribution rates and requirements

The total PFML premium is 0.88% of an employee's wages. This is split into two parts:

  • Medical Leave: 0.61%
  • Family Leave: 0.27%

As an employer, you are required to pay at least 50% of the total premium. You can also choose to cover the full 100% as an employee benefit.

Small business option If you have 30 or fewer employees and an average employee wage of 150% or less than the statewide average ($107,016 in 2025), you qualify for a reduced employer rate of 0.22%. However, you must still calculate and withhold the 0.44% for the employee's portion.

Private plans You can offer a private plan instead of participating in the state program. Your private plan must meet or exceed the coverage requirements set by the state. 

Find out more about Minnesota’s Paid Family Leave. 

Set up the PFML tax

Step 1: Add your policy 

  1. Go to Settings âš™, and select Payroll settings.
  2. From Minnesota Tax, select Edit ✎.
  3. Under Minnesota Paid Family and Medical Leave Tax (PFML) Leave select Start.
  4. Select your Minnesota full time employee count.
  5. Indicate if you have a Paid Leave Only account number by selecting Yes or No.
  6. Select Define Rates.
    • The percentages entered are based on the total contribution rate of 0.88%
    • If you qualify as a small business and cover your employee's portion of the premium, the maximum you can enter is 75% (which equates to a calculated rate of 0.66%).
  7. Enter your Policy Name.
  8. Select the effective start date of the policy. 
  9. Enter the percentages for you and your employees.
  10. Select Save.
  11. Select Save, then Done.

Step 2: Add the policy to your employees

  1. Go to All apps A bunch of numbers and letters on a tile wall., then Payroll, then Employees (Take me there).
  2. Select your employee.
  3. From Tax withholding, select Edit.
  4. From State withholding, select + Assign policy.
  5. Select the policy name you set up in Step 1.
  6. Select Save, then Done.
  7. Repeat steps 2-6 for all other Minnesota employees.

If you’ve run any payrolls before setting up this rate, don’t worry. We’ll automatically catch you up when you run your next payroll.

Download and install the latest payroll update. 

The Add Item Wizard for the new MN PFML pay items will launch when you pay your employees or add any new Minnesota employees.  It'll prompt you to enter the employer and employee tax rates.

Potential scenarios to be aware of:

  • If as the employer, you're funding the program entirely, enter .88% or .66% (small employer rate) for Co. Portion Rate and 0% for Emp. Portion Rate.
  • If you're splitting the cost with your employees, enter a percentage between 0.1% and 0.44% for their portion of the tax. 
  • If you're exempt from the program enter 0%. 
  • If you have employees exempt from unemployment, use the MN- Paid Leave (No SUI) pay items. Use the MN - Paid Leave pay items for employees subject to unemployment.

Step 2: Edit the new MN PFML tax items (if needed)

  1. Go to Employees and select Employee Center.
  2. Double-click your employee.
  3. Select Payroll Info.
  4. Select Taxes, then the Other tab. Look for and review the new MN PFML pay items. 

Edit or delete MN PFML

Edit your policy

  1. Go to Settings âš™, and select Payroll settings.
  2. From Minnesota tax, select Edit ✎.
  3. Under Minnesota Paid Family and Medical Leave Tax (PFML), select Edit next to the policy you want to edit. 
  4. Edit the rate, then select Save.
  5. Select Save, then Done.

Please note: If updating a policy to a retroactive date, past employee withholding cannot be adjusted. 

Remove the policy from your employee

  1. Go to All apps A bunch of numbers and letters on a tile wall., then Payroll, then Employees (Take me there).
  2. Select your employee.
  3. From Tax withholding, select Edit.
  4. From State withholding, look for the policy then select Unassign.
  5. Select Unassign to confirm action.

Change the tax rate for each employee

  1. Go to Employees, and select Employee Center.
  2. Double-click the employee's name.
  3. Select the Payroll Info tab, and select Taxes.
  4. Select the Other tab.
  5. Select the MN Paid Family Leave items to change the rate.
  6. Select OK, then Save & Close.
  7. Repeat steps 2 - 7 for each covered employee.

Delete MN PFML item from your employee’s profile

  1. Go to Employees, and select Employee Center.
  2. Double-click your employee’s name.
  3. Select Payroll Info, then Taxes.
  4. Select the Other tab.
  5. Select the MN Paid Family Leave items you want to delete. You'll need to delete both employee and employer portions to completely remove the tax.
  6. Select OK, then Save & Close.

Exempt employees from MN PFML

  1. Go to All apps A bunch of numbers and letters on a tile wall., then Payroll, then Employees (Take me there).
  2. Select your employee.
  3. From Tax withholding, select Edit.
  4. From State withholding, under Minnesota Paid Family and Medical Leave, select [Employee] is exempt from this contribution.
  5. Select Save.
  1. Go to Employees and select Employee Center.
  2. Double-click the employee’s name.
  3. Select Payroll Info, then Taxes.
  4. Select the Other tab.
  5. In the Item Name, select the MN - Paid Family & Medical Leave items, then Delete.
  6. Select OK twice.
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