Exploring the Taxation of New York's New Paid Family Medical Leave Benefit
20 Pages Posted: 6 Dec 2018
Date Written: October 15, 2018
This article examines the taxation of benefits received under New York’s new Paid Family Leave Act. The article argues that New York’s Paid Family Leave Act is unique when compared to similar provisions enacted in other states to date and that benefits paid under the tax are excluded from federal gross income by operation of Internal Revenue Code Sections 104 and 105. Additionally, the article contends that New York’s Department of Taxation and Finance’s Notice N-17-12 errs in concluding that amounts paid under the Act are includible in federal gross income. The article contends that insurance policies issued in compliance with the Act are “health insurance” and that income replacement benefits paid under the Act are paid for “sickness” as described in Code Sections 104 and 105.
Keywords: Paid FMLA, Paid Family Leave, Health Insurance Proceeds, Wage Replacement Theory
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