Oregon State Disability benefits

[Marie14]

I am an Oregon State resident and work for a company that created a PFML plan that combines with their short-term disability plan.  On my payroll check, the company shows PFML as income and I am deducted after-tax PFML for the same amount.  In addition, I have after-tax deductions for short-term disability.  I went on maternity leave in 2024 and received 12 weeks of Maternity leave (payable at 75%) and 14 weeks of bonding via short-term disability (payable at 100%).  I received two W2's from the third party company. On the first one the wages in Box 1 were zero, Box 12 had a code J, and Box 13 "third-party sick pay" was checked.  I know that is non-taxable and did not report this W2 in Turbo Tax.  However, the second W2 had wages in Box 1 (for the 14 weeks), federal income tax withheld, no state income tax withheld, and Box 13 had third-party sick pay checked.   When I entered the W2 into Turbo Tax the income for the 14 weeks flowed into income on the Oregon state income tax.  When I asked the third party company about it they said they did not withhold state income tax because they said PFL (paid family leave) is not taxable by the state.  This seems right to me since I have short-term disability deducted as after-tax; however, Oregon is reporting it as income in Turbo Tax.  Is this correct?  And if not, how do I adjust the state income on Oregon's income tax return? 

[AmyC]

You may need to adjust the federal first due to a new ruling in January.

Benefits from Paid Leave are taxable according to the percentage paid by the employer. Your w2 should not include the portion you paid for federal or state. The IRS announced it in January and the forms may have already been created, with the full amount. See The IRS guidance.

Your employer paid 40% minimum up to all of it. You state that you had money withheld so that % part of the amount is not taxable. Does your w2 show the full amount received or a portion of it? You may need a corrected w2.

The same is true for OR taxability. See Paid Leave Taxability