What changed—and why it matters to trucking

Washington has approved a technical fix to its Paid Family and Medical Leave (PFML) program that changes how the total premium is divided between the family-leave and medical-leave “shares,” without increasing the overall rate. On March 11, 2026, Gov. Bob Ferguson signed 2SHB 2345, allowing employers to deduct the full employee share of the medical-leave premium and shifting the employer obligation to the family-leave share via a formula. The goal is to minimize federal employment tax exposure tied to employer-funded portions of medical-leave benefits under recent IRS guidance. For fleets with Washington-based drivers or staff, the change primarily affects payroll configuration and tax reporting in the coming year.

Federal tax backdrop driving the change

The IRS’s Revenue Ruling 2025-4 clarified that state-paid medical-leave benefits attributable to employer contributions are wages for federal employment tax purposes (FICA/FUTA) and treated as third‑party sick pay. By contrast, family-leave benefits are not treated as wages (though generally includible in income). The IRS then extended its enforcement transition period through calendar year 2026, giving states and employers time to retool systems. Washington’s reallocation steers more employer responsibility to the family-leave share to avoid creating additional federal payroll tax liabilities tied to medical-leave benefits.

Timing: What changes now vs. later

The new law takes effect 90 days after adjournment, but Washington typically recalculates PFML rates and the family/medical split each October for changes that start January 1 of the next calendar year. The Employment Security Department (ESD) has indicated the 2026 premium rate and contribution split remain unchanged; the revised allocation is expected to show up with the 2027 rate cycle and accompanying guidance. For trucking employers, that means you keep withholding and remitting under 2026 rules while preparing payroll for a 2027 switchover.

2026 snapshot: rates and thresholds you’re using today

For wages paid in 2026, the total PFML premium is 1.13% of each employee’s gross wages up to the Social Security wage base ($184,500 for 2026). Employers pay 28.57% of the total premium and employees pay 71.43%. Employers with fewer than 50 employees in Washington are not required to pay the employer portion, but they must still withhold and remit the employee share (or choose to cover it). Washington’s split between family and medical shares has hovered near 48% family/52% medical in recent years; that underlying split is what the new law is designed to rebalance for 2027.

Action items for owner-operators and fleet managers

Coordinate with payroll now: Ask your payroll provider how they will apply Washington’s reallocation for the 2027 rate year, and schedule a Q4 2026 test cycle to validate calculations and paystub displays before January payrolls run.
Follow 2026 rules through year-end: Continue using the 1.13% rate, the current employer/employee split, and the $184,500 wage cap for 2026 wages. First-quarter 2026 premiums are due by the end of April; you cannot retroactively withhold.
Mind the IRS transition—and its limits: For 2026 only, the IRS extended transition relief on certain medical-leave benefit reporting and withholding tied to employer-funded amounts. However, the IRS did not extend relief for “employer pick-ups” of an employee’s PFML contribution in 2026—those pick-ups are treated as wages for federal employment tax purposes and must be reported on the W‑2. Consult your tax advisor.
Small fleets under 50 WA employees: You remain exempt from the employer portion in 2026 but must collect the employee share. Consider whether opting in to the employer portion makes sense for access to small-business assistance grants.
Multi-state carriers: Confirm which workers are covered by Washington PFML and ensure your systems stop PFML withholding once an employee reaches the 2026 Social Security cap.

Bottom line

Washington’s PFML premium reallocation is a behind-the-scenes fix aimed at keeping employer-paid medical-leave benefits from triggering extra federal payroll tax work for carriers. Nothing changes mid‑year for 2026—but fleets should treat 2026 as a build year: map new payroll codes, plan employee communications, and watch for ESD’s implementation guidance ahead of the 2027 rate cycle. The payoff is smoother tax compliance and fewer surprises once the IRS transition window closes.

Sources Consulted: JD Supra (Littler), Washington State Legislature (bill text and bill reports), Washington Employment Security Department (Paid Leave Updates), Internal Revenue Service (IRB 2025-07; IRB 2026-02).

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This article was prepared exclusively for truckstopinsider.com. For professional tax advice, consult a qualified professional.