New York Says Family Leave Benefits Will Be Taxable Income

Benefits provided to employees under a New York paid family leave law that takes effect in January will be treated as taxable nonwage income that must be included in federal gross income, the state tax agency said.

The state family leave program, enacted in 2016, has tax implications for New York employees, employers, and insurance carriers, including self-insured employers, employer plans, approved third-party insurers, and the state insurance fund, the Department of Taxation and Finance said in an Aug. 25 notice (N-17-12).

The law covers private-sector and public employees. The benefits will be funded by payroll deductions earmarked ...