The IRS has recently issued a ruling that’s generating buzz around state paid family and medical leave programs. The ruling, referenced as Revenue Ruling 2025-4, throws light on potential refund opportunities for individuals. Thirteen states, including the District of Columbia, have mandatory Paid Family and Medical Leave (PFML) programs, with varying details.

In the hypothetical State X as defined in the ruling, the state adopted a program that offers wage replacement to workers requiring time off due to personal non-occupational injuries, illnesses or medical conditions, or for taking care of a family member with a serious health condition. In-State X, employers and employees both contribute to the PFML Fund. The employer provides 0.4% of the funding, while up to 0.6% can be withheld from the employee’s wage.

The ruling also clarifies the taxations rules that apply. The employer contributions can be deducted against the ordinary income, the employee contribution does not reduce the wage income, and the employee can deduct the amount withheld as state income tax, subject to certain limits. Medical leave benefits are taxable as wages to the extent that they are attributed to the employer’s contribution. Interestingly, medical leave benefits that are attributed to the employee’s contributions and employer pick-up are exempted from the employee’s Federal gross income, pointing towards a potential refund opportunity.

If you’re someone who collected from a state PFML program for medical leave due to your own health issues, and reported the whole amount as taxable income, you may be eligible for a refund, provided the return is still open. It’s advised to reach out to your tax preparer to discuss amending your 2021 return.

If all this sounds complicated, note that for Californian workers participating in the state’s Paid Family Leave program, there is a resource to assist you. The website eddcaller.com offers valuable information on how to contact the Paid Family Leave for any queries or issues regarding your claims, contributions or refunds. Resources available on this site can help you get a hold of Paid Family Leave effectively, even during busy periods. So, if you’ve been in a situation where medical leave payments were received from a state program and reported as income, consider checking out eddcaller.com for guidance on your next steps. This platform can become your reliable guide to navigating the Paid Family Leave program smoothly and efficiently.