Here We Go…Minnesotans Have A New Tax Coming January 1st

We are just about 5 weeks away from the start of 2026, and with the new calendar comes new laws, and for Minnesotans, a new tax will also be on the way. The new tax, which both employees and employers will be paying, will go towards Minnesota's Paid Family and Medical Leave (PFML) program. Here's what we know about the incoming new tax, and how much it's going to cost you.

Minnesota's Paid Family & Medical Leave Arrives Jan 1, 2026

Many people may wonder what the Paid Family & Medical Leave program is and who it benefits. Well, according to the Minnesota Chamber of Commerce, PFML "requires every employer in the state to offer up to 12 weeks of paid medical leave and up to 12 weeks of paid family leave (maxing out at 20 weeks total in a 52-week period) for all employees. Wage replacement is partial, and job protection after 90 days from date of hire."

Now that you know what the program is, more information on the program here, this is how it is being funded.

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PFML is being funded in two different ways, one through surplus state funds, and the second is through the new payroll tax, which amounts to .88%. Half of that .88%, or .44% can come from your paycheck, and the other half comes from your employer.

Now, not everyone could be getting that .44% taken out each pay period, as employers can choose to cover more than half, and some employers with fewer employees will also pay a lower rate, according to the Minnesota Chamber of Commerce.  

How Much Will This Cost You, The Employee?

The new tax deduction will hit people differently depending on how much they make, but Minnesota has provided an online calculator for you to see exactly how much you are going to have deducted from your paycheck.

An example I ran was a Minnesotan who makes $75,000 a year, will see another $330 taken annually from their checks for this program.

While $330/year doesn't seem like a lot, it will surely be something that is debated during the upcoming 2026 state elections.