New changes will cost taxpayers an extra $300 million per year, payroll tax to increase by 37%
The National Federation of Independent Business (NFIB) is sounding the alarm after a new state report shows proposed changes to the Minnesota Paid Leave Mandate will cost an additional $300 million per year starting in 2027 and result in a 37% increase in the Paid Leave Tax.
A proposal being fast-tracked at the Minnesota Legislature makes several modifications to the Paid Leave Mandate, which goes into effect on January 1, 2026.
Most significantly, the Minnesota Senate adopted an amendment to Senate File 5430 that will allow applicants to receive payment during the first week of Paid Leave beginning in the second year of the program. The Minnesota House Ways & Means Committee is poised to adopt identical language later this morning.
This change will cost taxpayers an extra $300 million per year in 2027.
As a result, the Paid Family Medical Leave Tax will rise to 0.96% in 2027, a 37% increase over the Walz Administration’s projected Paid Leave Tax rate.
“Minnesota’s Paid Leave Mandate is turning into a complete financial boondoggle,” said John Reynolds, NFIB Minnesota State Director. “DFL lawmakers continue to make reckless decisions that will take more hard-earned money out of the pockets of small business owners and their employees. We’re still nearly two years away from this program launching and already promises are being broken.”
NFIB Minnesota has issued recommendations to rein in the cost and burden of the Paid Leave Mandate. Small business owners continue to urge lawmakers to adopt the NFIB proposals and get the program under control before it’s too late.
Read the new Paid Leave Mandate fiscal note here: HF 5363 Fiscal Note (First Week Paid)
See the NFIB-backed Paid Leave Reform legislation here: 2024 House File 3530/Senate File 3874.
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For 80 years, NFIB has been advocating on behalf of America’s small and independent business owners, both in Washington, D.C., and in all 50 state capitals. NFIB is nonprofit, nonpartisan, and member-driven. Since our founding in 1943, NFIB has been exclusively dedicated to small and independent businesses, and remains so today. For more information, please visit nfib.com.
