IRS Tax Guidance
IRS Tax Guidance — FAMLI Medical Benefits
This page is your hub for updates, resources, and educational materials about IRS Rev. Rul. 2025-4 and its impact on FAMLI medical leave benefits.
Important: The information on this page is for general informational purposes only. It is not tax or legal advice. Employers and individuals should consult their own tax advisors about their federal tax obligations.
What’s Changed?
Beginning in January 2026
The IRS will consider paid medical leave benefits provided by state programs to be a type of taxable wages.
This means:
If you’re a large employer (10 or more employees): the IRS will require you to cover your portion of Social Security and Medicare taxes (FICA) on paid medical leave benefits.
If you’re an employee of a large employer: the IRS will tax a portion of the benefits you receive from FAMLI for taking care of your own health condition, including pregnancy.
If you’re self-employed, or are a small employer (employ less than 10 people): you are not impacted. The IRS will not require you to cover FICA taxes on paid medical leave benefits.
If you’re an employee of an opted-out local government and have elected FAMLI coverage: you are not impacted. The IRS will not require you to cover FICA taxes on paid medical leave benefits.
Please note: These rules are set at the federal level. FAMLI does not control federal tax policy. Our goal is to make sure Colorado employers and workers can comply with that policy as easily as possible. For the most current federal guidance, visit the IRS website or speak directly with a qualified tax advisor.
Employer Resources
Use these resources to help you understand and communicate about the IRS guidance and FAMLI medical benefits.
IRS Guidance & FAMLI Medical Benefits (For Employers)
A high-level overview of the new IRS rules, how they intersect with FAMLI benefits, and answers to common employer questions.
Go to IRS Guidance for Employers Page
Tax ToolKit: FAMLI Edition
Explainers, template communications, FAMLI benefit report walk-throughs, and links to the latest IRS materials.
[Coming Soon]
Webinars & Office Hours
Recordings and upcoming session details for FAMLI webinars and Q&As focused on IRS guidance and tax questions related to FAMLI medical benefits.
[Coming soon]
Claimant Resources
These resources are designed to help individuals who receive FAMLI benefits better understand how federal tax rules may apply.
Taxes & FAMLI Medical Benefits
A high-level overview of the new IRS rules, how they intersect with FAMLI benefits, and how FAMLI will help if you’re impacted.
[Coming Soon]
Tax ToolKit: FAMLI Edition
Explainers, how-to videos, reporting document overviews, and more.
[Coming Soon]
General FAMLI Benefits Information
Learn more about FAMLI medical leave benefits, eligibility, and how benefits are calculated.