Report on paid family medical leave projects higher payroll tax necessary
By Angela Garin | November 22, 2023 | All members
A recent actuarial report commissioned by the Minnesota Department of Employment and Economic Development (DEED) has projected that the payroll tax required to support the state's new paid family & medical leave (PFML) program will likely need to be higher than initially anticipated. The report, conducted by Milliman, an actuarial consulting firm, suggests that a 0.78% payroll tax would be necessary in the first three years of the program, compared to the 0.7% rate that was originally estimated.
The higher tax rate is attributed to several factors, including the projected utilization of the program, the cost of benefits, and the need to maintain a reserve fund to ensure the program's financial stability. The actuary's recommendations also suggest that the payroll tax rate could increase to 0.83% in subsequent years.
The report's findings have renewed concerns among businesses and lawmakers, who worry about the potential impact of higher payroll taxes on employers and employees. GOP legislators, including Sen. Julia Coleman, emphasized that this is what they were warning the DFL majority of last year saying, “This was something we flagged. We pointed out that the math wasn’t adding up here.” DFL senator and author of the bill, Sen. Mann said that the report still shows the payroll tax is below the legislative cap and said, “So, it’s not like we were off by a significant margin, whatsoever.”
The PFML program is scheduled to begin in 2026.
Angela Garin | Senior Director of Advocacy |
agarin@careproviders.org | 952-851-2498