Minnesota Holds Paid Leave Payroll Tax at 0.88% for 2027

Overview

• The Minnesota Department of Employment and Economic Development announced Friday that the payroll tax for the state paid leave program will remain 0.88% for 2027, split between employers and workers.
• An independent actuarial report by Spring Consulting Group projects 2028 revenue near $1.3 billion and expenses above $1.5 billion, leaving about $200 million in reserves or roughly 13% of expenses, well below the 25% legal minimum.
• If those projections hold, DEED could need to raise the payroll tax up to the 1.1% statutory cap unless the Legislature changes the law, which would increase payroll deductions for workers or costs for employers.
• DEED says the projections lean heavily on experience from other states and will be refined as Minnesota-specific data accumulates, noting early claim patterns included a post-launch spike and may not persist.
• So far in 2026 the program has processed roughly 126,000 applications, approved about 75,000 claimants and paid more than $600 million, while rejecting over 40% of applications mainly for missing health‑provider certification; the program began with a one‑time seed fund of about $668 million and requires annual actuarial reviews and rate-setting.