Can you include Massachusetts Paid Family Leave (Box14) as part of federal Itemized Deductions

Robin17
Robin17 Member Posts: 1 Newcomer
in Credits/Deductions

We are married filing jointly and will be itemizing our deductions for the year.

I ran our taxes through TurboTax, H&R Block, and FreeTaxUSA

TurboTax and H&R Block both matched exactly, calculating our itemized deductions as approximately $69,000.

FreeTax USA included a slightly higher amount, and after going through our forms to reconcile the amount, we figured out that it is also including the Box 14 amount on our W2 for state of Massachusetts Paid Family Medical Leave act amounts automatically withheld in our paychecks.

From my research in the guidance (Situation 1 in article linked), I understand that these amounts can be included in itemized deductions, so long as we do not exceed the SALT Cap (which is $40,000 for Tax Year 2025 and our Modified AGI is less than $500k, so I believe our cap is $40,000). I believe FreeTax USA is thus calculating the correct amount, but wanted to see if anyone else is coming across this given the difference with TurboTax and H&R Block?

Does anyone know if you can include Massachusetts Paid Family Medical Leave amounts withheld if you are itemizing deductions (so long as you are below the SALT Cap of $40k)?

Answers

  • JMSSGV
    JMSSGV Member, Star Posts: 271 image
    edited March 15

    Asked and answered on Reddit. https://www.reddit.com/r/tax/comments/1ru20y4/salt_cap_and_paid_family_medical_leave/

  • GeorgeM
    GeorgeM FreeTaxUSA Agent Posts: 73 image
    Hello Robin17:

    Yes, you can include the amounts withheld from your compensation—as state taxes paid—in connection with the MA Paid Family Medical Leave. IRS Revenue Ruling 2025-4 defined payments of this type as the equivalent of a state income tax and thus, can be reported as an itemized deduction on a taxpayer’s MA tax return, provided, as you indicated, the taxpayer also itemizes their deductions on their federal tax return.

    In December 2025, MA elected to delay implementation of certain portions of IRS Revenue Ruling 2025-4 due to new guidance issued by the IRS (see https://www.mass.gov/info-details/paid-family-and-medical-leave-pfml-tax-information-for-employers).

    However, that delay in implementing certain provisions of IRS Revenue Ruling 2025-4 did not affect a taxpayer’s ability to continue to treat their contributions to the MA PFML as a state income tax paid in the tax year the contributions were deducted from their compensation.

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