Employment Tax
US | State Paid Family Leave Programs and Vermont Child Care Contribution Updates
Summary
This is an update to our Alert issued December 2023, as the expansion or inception of state-run programs to provide employee continued wages during illness for themselves or a family member continues. This alert provides a summary of state-run programs that are set to begin soon in Delaware, Maryland, Maine, Minnesota, and Vermont.
The detail
Delaware – Family and Medical Leave Insurance program
All Delaware employers with 10 or more employees are required to participate in Delaware’s Family and Medical Leave Insurance program beginning January 1, 2025.
The employer is responsible for all contributions required by the program. The contributions are based on an employee’s earnings up to the Social Security limit. The rates are guaranteed through 2026 at 0.8% of wages, and component rates are available for each line of coverage. Employers can require their employees to pay up to 50% of the cost of the program.
Employers with 10 or more employees may opt out of the Delaware Paid Leave plan if they purchase a private plan that provides the same or better benefits as the state plan. The private plan can be either an admitted carrier’s approved insurance plan or a self-insured program. Employers who wish to use a private benefit plan to offer paid leave benefits to their employees must obtain the Division’s approval and opt out of the Delaware Paid Leave program on a yearly basis. The first opt-in/opt-out period is September 1 through December 1, 2024.
Employees can begin receiving leave insurance benefits on January 1, 2026.
Maryland – Family and Medical Leave Insurance (FAMLI) program
Maryland’s FAMLI program was established through the Time to Care Act passed. Any worker in the State who has worked 680 hours over the previous four calendar quarters would be considered covered.
Employers will be required to enroll in the State Plan or seek approval for a private plan that provides benefits equal to or greater than the State Plan.
Employer and employee contributions are required beginning July 1, 2025. Please note that this change to the effective date was updated by a bill passage in April 2024. As such, payroll deductions will begin July 1, 2025, for employers participating in the State Plan. Those first payroll deductions from workers and employers will then be submitted to the State by October 2025.
The State plan contribution rate was set on October 1, 2023, which is 0.9% of covered wages up to the Social Security wage cap. The rate will be equally divided between employers and employers with 15 or more workers. Employers with 14 or fewer employees are not required to contribute but will still collect payments from their workers. Employers may collect up to the full amount from employees. Employers can choose to pay the full contribution amount as an added employee benefit.
While the Department of Labor sets the contribution rate for the State Plan, private plans will set their own rates. Employees cannot be charged more in a private plan than they would be through the State Plan.
Employees can begin receiving leave insurance benefits on July 1, 2026.
Maine – Family and Medical Leave program
Employer and employee contributions are required for Maine’s Family and Medical Leave program beginning January 1, 2025. For calendar years 2025-2027, the combined contribution rate is set at either 0.5% or 1%of wages based on the size of the employer. Employers with 15 or more employees will contribute 1% of wages and may deduct up to half of the contribution from the employees’ wages.
Employers with less than 15 employees will contribute 0.5% of wages and may deduct the entire amount from the employees’ wages.
Employees can begin receiving leave insurance benefits on May 1, 2026.
Minnesota – Family and Medical Leave program
Employer and employee contributions are required for Minnesota’s Family and Medical Leave program beginning January 1, 2026. The program premium rate is currently set at 0.7% of an employee’s taxable wages capped at the annual Social Security limit. The Minnesota Paid Leave Law was amended in the 2024 legislature to require an independent actuarial analysis to set the initial and subsequent year tax rates.
Employers may charge a maximum of half this premium (or 0.35%) to their employees through a wage deduction.
Employers are required to submit the first wage detail reports on October 31, 2024, and will be based on wages paid between July 1, 2024, and September 30, 2024, these reports are for information purposes only and no premiums are to be paid.
Employees can begin receiving leave insurance benefits on January 1, 2026.
Vermont – Child Care Contribution
Vermont’s Child Care Contribution (CCC) newly enacted payroll tax is effective July 1, 2024. The new law makes major investments in Vermont’s childcare system, implementing changes in both early childhood and school age settings.
The rate is 0.44% on wage income and 0.11% on self-employment income. Employers are responsible to pay a 0.44% payroll tax on all wages earned in Vermont. Employers have the option to deduct and withhold 25% of the required contribution (i.e., 0.11%) from employee wages. Payment of the Vermont CCC should be made in the same way employer’s remit their Vermont Income Tax Withholding. The CCC applies to wages earned while physically performing services in Vermont that are subject to Vermont income tax withholding, including for nonresident short term business travelers to Vermont.
Contact us
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Tina Schrob
Partner
Greg Fetter
Partner
Ligeia Donis
Partner
Simply follow our Vialto Alerts page on LinkedIn and posts will be displayed on your feed. To ensure you don’t miss one, once you’re on our LinkedIn page, click on the bell icon under the banner image to manage your notifications.
Further information on Vialto Partners can be found here: www.vialtopartners.com
Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.
© 2025 Vialto Partners. All rights reserved.