IRS extends PFML enforcement relief through calendar year 2026
The IRS has granted states and employers another year to adapt payroll and reporting systems for state Paid Family and Medical Leave (PFML) programs. In Notice 2026-6, issued December 24, 2025, the agency extends transition relief through December 31, 2026 for certain employment tax withholding and reporting tied to the portion of state-paid medical leave benefits attributable to employer contributions. Practically, for benefits paid in 2026, states and employers are not required to apply third‑party sick pay rules or withhold/pay Social Security and Medicare taxes on that employer‑funded portion, and penalties for related filing/statement errors will not be imposed. The extension does not cover “employer pickups” (voluntary employer payment of an employee’s PFML contribution), which still must be treated as wages and reported on Form W‑2. Family leave benefit reporting is unaffected.
This relief builds on Revenue Ruling 2025-4, which clarified federal tax treatment for state PFML programs beginning January 1, 2025. Key distinctions remain: family leave benefits are includible in federal gross income but are not wages (states must report them on Form 1099), while for medical leave benefits, only the portion funded by employer contributions is includible in income and subject to FICA. Guidance for private PFML plans (insured or self‑insured) is still pending. With the new relief, employers effectively have until 2027 to finalize processes for the medical-leave, employer-contribution portion.
Action checklist for carriers with employees in PFML states
- Map exposure and timing. Identify where you have W‑2 drivers in PFML jurisdictions and confirm which benefits are paid by the state versus employer plans; plan for full compliance beginning January 1, 2027 absent further changes.
- Coordinate payroll/tax reporting. Ensure your payroll provider can segregate employer versus employee PFML contributions and handle Form W‑2 and applicable 1099 reporting consistent with Revenue Ruling 2025‑4.
- Review “employer pickup” practices. Voluntary employer payments of the employee share remain taxable wages and must be reported in 2026—relief does not extend to pickups.
- Communicate with drivers. Set expectations on tax forms and timing so employees aren’t surprised by state-issued 1099s for family-leave benefits.
Trucking insurance: align coverage with FMCSA rules and shipper demands
While you tune payroll systems, take the opportunity to tighten your insurance program ahead of spring bid season. A well-built trucking package typically combines auto liability, cargo, physical damage, excess liability, property/warehouse, and workers’ compensation for fleets—and, for owner-operators, targeted protections such as non‑trucking liability, occupational accident, and physical damage. These building blocks address road exposures, cargo theft, and contractual obligations many shippers now impose.
Regulatory must‑haves still start with FMCSA financial responsibility. Federal minimum liability remains $750,000 for for‑hire carriers of non‑hazardous property with GVWR ≥10,001 pounds; $1,000,000 for certain oil/particular hazmat categories; and $5,000,000 for high‑risk hazmat. Proof is filed via BMC‑91/91X or via an MCS‑82 bond, and your liability policy must carry the MCS‑90 endorsement (or MCS‑82 bond alternative) as evidence of public liability. Note that FMCSA is modernizing filings: the agency’s “Motus” platform is slated to replace the current Licensing & Insurance system in 2026, so coordinate with your insurer/broker to ensure filings migrate cleanly.
What this means for 2026 planning
- Budget and cash flow: The PFML relief buys time, but do not delay system changes—treat 2026 as a build year so 2027 compliance is smooth.
- Contracting advantage: Presenting clean insurance certificates that exceed minimums (for example, $1 million liability limits and documented cargo terms) can speed shipper onboarding and reduce friction in RFPs.
- Underwriting leverage: Safety tech, driver selection, and maintenance discipline still drive premiums. Use your broker’s market access and claims advocacy to benchmark limits/deductibles and to position your risk amid tightening capacity.
Bottom line: On the tax side, the IRS has pressed pause for one more year on certain PFML employment-tax enforcement for state‑paid medical leave tied to employer contributions. On the risk side, 2026 is a good moment to confirm that your trucking insurance program cleanly addresses FMCSA filings and shipper expectations, while tailoring coverages to your routes, cargo, and driver mix. The combination should help owner‑operators and fleets control volatility, stay compliant, and defend margins in a still‑choppy market.
Sources Consulted: Risk Strategies (Insights and Trucking Insurance pages); Internal Revenue Service (Notice 2026‑6; Revenue Ruling 2025‑4); Federal Motor Carrier Safety Administration (Insurance Filing Requirements; MCS‑90 overview).
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This article was prepared exclusively for truckstopinsider.com. For professional tax advice, consult a qualified professional.
