The tax laws changed in January 2025 and the IRS has determined PFL is taxable income. CA does not deem it taxable so it should be removed from CA. See how at Paid Family Leave | FTB.ca.gov. The program had to be changed to accommodate the new laws.
The IRS guidance states:
IR-2025-16, Jan. 15, 2025
WASHINGTON — The Internal Revenue Service today issued guidance on the income and employment tax treatment of contributions and benefits paid in certain situations under a state paid family and medical leave program, as well as the related reporting requirements. Rev. Rul. 2025-4 provides guidance to the District of Columbia and states that have mandatory paid family and medical leave programs and for employees working in and employers operating in those states. Today’s guidance responds to requests to clarify the federal tax treatment of state paid leave programs that help pay employees who can’t work because of non-occupational injuries to themselves or family members, as well as sickness and disabilities.
You need to view your forms, including all worksheets:
- In desktop, switch to Forms Mode.
- For online:
- On the left side, select Tax Tools
- Select Print center
- Select Print, save or preview this year's return
- If you have not paid, select pay now.
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