An Act Regarding the Taxation of Paid Family and Medical Leave
Maine Legislature, Session 132, LD 0106
Committee: Taxation
Sponsors: CLOUTIER
Amends: 26 MRSA §850-M, 36 MRSA §5122, 36 MRSA §5255-D

Legislative Document
No. 106
H.P. 71
House of Representatives, January 8, 2025
An Act Regarding the Taxation of Paid Family and Medical Leave 
Benefits
Submitted by the Department of Labor pursuant to Joint Rule 204.
Reference to the Committee on Taxation suggested and ordered printed.
ROBERT B. HUNT
Clerk
Presented by Representative CLOUTIER of Lewiston.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  26 MRSA §850-M, sub-§1-A is enacted to read:
1-A.  State tax.  An individual filing a new claim for family leave benefits or medical 
leave benefits under this subchapter may elect to have the administrator deduct and 
withhold state income tax from the individual’s payment of benefits at the rate of 5%. The 
department shall advise an individual filing a new claim, at the time the individual files the 
claim, that:
A.  The benefits are subject to state income tax;
B.  Requirements exist pertaining to estimated tax payments;
C.  The individual may elect to have state income tax deducted and withheld from the 
individual's payment of benefits at the rate of 5%; and
D.  The individual is permitted to change a previously elected withholding status.
Sec. 2.  36 MRSA §5122, sub-§1, ¶QQ is enacted to read:
QQ.  For each taxable year beginning on or after January 1, 2026, an amount equal to 
the amount of family leave benefits or medical leave benefits paid pursuant to Title 26, 
section 850-C, to the extent those benefits are not included in the taxpayer’s federal 
adjusted gross income.
Sec. 3.  36 MRSA §5122, sub-§2, ¶AAA is enacted to read:
AAA.  For each taxable year beginning on or after January 1, 2026, an amount equal 
to the amount of any family leave benefits or medical leave benefits that were repaid 
by the taxpayer pursuant to Title 26, section 850-L, subsection 2 that have been 
previously taxed under this Part.
Sec. 4.  36 MRSA §5255-D is enacted to read:
§5255-D.  Withholding on paid family and medical leave benefits
When an individual receiving family leave benefits or medical leave benefits under the 
paid family and medical leave benefits program established in Title 26, section 850-B 
makes an election pursuant to Title 26, section 850-M, subsection 1-A, the administrator 
of the paid family and medical leave benefits program shall deduct and withhold state 
income tax at the rate of 5% from the family leave benefits or medical leave benefits paid 
to the individual pursuant to Title 26, sections 850-B and 850-C.
SUMMARY
This bill provides that benefits paid from the paid family and medical leave benefits 
program are subject to state income tax to the extent those benefits are not included in the 
taxpayer's federal adjusted gross income.  It also provides that a taxpayer's federal adjusted 
gross income may be reduced by the amount subject to repayment that has been previously 
taxed by the State. It also allows individuals filing a new claim for family leave benefits or 
medical leave benefits to elect to have the administrator of the program deduct and withhold 
state income tax from the individual's payment of benefits at the rate of 5% and requires 
the administrator of the program to deduct and withhold state income tax.  It also requires 
the department to advise individuals filing a new claim for benefits that the benefits are 
subject to state income tax.