What does the new payroll tax mean for CT employees?
All Connecticut employees will have a few more dollars taken out of their paychecks starting Jan. 1, 2021, as the state implements a new payroll tax to help fund Connecticut's Paid Family Leave Program.
The Paid Family and Medical Leave Act grants workers paid leave for life events covered under the the Connecticut Family and Medical Leave Act, federal Family and Medical Leave Act of 1993, and the Connecticut Family Violence Leave Act.
Although deductions start in 2021, workers will not be permitted access to the program's benefits until Jan. 2022, when enough funds are available.
Below is what you need to know about the new tax and what it means for workers.
Who is eligible for the program?
The PFMLA is available to all employees who meet certain earned-wage thresholds. Self-employed workers and sole proprietors can opt-in to the program.
To qualify, you must be a Connecticut resident enrolled in the program who has “earned wages of at least $2,325 in the highest quarter of the first four of the five most recently completed quarters and are currently employed, or have been employed within the last 12 weeks, or are self-employed, a sole proprietor.”
Types of wages covered include salary or hourly pay, vacation pay, holiday pay, tips, commissions, severance pay and the cash value of any “in-kind” payments.
How much will be taken out of my paycheck?
Payroll deductions are capped at 0.5 percent of an employee’s wages, up to the Social Security contribution base that maxes out at $142,800 for 2021.According to the state’s contribution estimator, someone who makes $40,000 before taxes is subject to having $200 taken out of each check.
The contribution estimator can be used to determine how much will be deducted from your earnings.
How long is leave?
In most cases the state will provide you up to 12 weeks of benefits. An additional two weeks of benefits is available for those who incur serious health conditions during pregnancy.
Under what circumstances can I access these benefits to take leave?
Anyone dealing with their own or a family member’s serious illness or injury; bonding with their child after birth, adoption or a new fostering arrangement; tending to the needs of a military family member injured during active duty; or serving as an organ or bone marrow donor is eligible for up to 12 weeks of benefits.
Someone impacted by domestic violence is eligible for 12 days of benefits while seeking out care, relocating or participating in criminal or civil proceedings.
How much pay do I receive if I take leave?
The state determines how much pay each employee on leave receives based on the following calculations:If your wages are less than or equal to the Connecticut minimum wage multiplied by 40, your weekly benefit will be 95 percent of your average weekly wage.
The minimum wage in January 2022 multiplied by 40 is equal to $520 weekly, and 95 percent of that average wage is $494 weekly. In July of 2022 that will increase to $560 weekly and in June 2023 it’ll be raised to $600.
If your pay exceeds the minimum wage multiplied by 40, your weekly benefit will be 95 percent of Connecticut’s minimum wage multiplied by 40 plus 60 percent of your average weekly wage — up to 60 times the state’s minimum wage.
In January 2022, you would be receive $780 weekly, increasing to $840 on July 1, 2022, and $900 on June 1, 2023.A clause of the PFMLA stipulates benefit rates can be reduced if there aren’t enough funds in the program.
Are there any exemptions?
An employer can choose not to contribute only if they offer employees a comprehensible plan that supplies the same or better benefits than the state plan.