Minnesota Maintains Paid Leave Tax Rate at 0.88% for 2027 Amidst Financial Reserve Concerns
The Minnesota Department of Employment and Economic Development (DEED) has decided to keep the wage tax for the state's paid leave program at 0.88% for 2027. While this provides relief to businesses and workers, an independent analysis indicates that the…
Minneapolis St. Paul, MN, July 31, 2026 —
The Minnesota Department of Employment and Economic Development (DEED) has announced that the wage tax rate for the state’s paid leave program will remain at 0.88% for the year 2027. This decision offers a measure of stability for both employers and employees who contribute to the program.
While the maintained tax rate may provide immediate relief, an independent analysis has raised concerns about the long-term financial health of the paid leave program. According to the analysis, the program’s financial reserves are anticipated to experience a significant decline in the upcoming years.
The projections indicate that if the current tax rate of 0.88% is sustained, the program’s reserves could fall below $200 million by the close of 2028. This potential decrease in financial reserves suggests a need for future review of the program’s funding structure.
The paid leave program, established to provide financial support for Minnesotans needing time off for various personal or family reasons, relies on these wage contributions. The rate set by DEED is intended to balance the program’s operational needs with the economic impact on the state’s workforce and businesses.
Further details regarding the methodology of the independent analysis and potential implications of the diminishing reserves were not immediately available. DEED’s decision for 2027 allows for a continuation of the existing contribution structure while the projected financial trends are monitored.
Story summarized from the original created by Renee Cooper on kstp.com, see more information here.
