Setting Up Maine Paid Family Leave in QuickBooks Online Payroll
Maine PFML contributions begin through QuickBooks Online Payroll, with rate-split configuration and per-employee policy assignment required before October 1.
QuickBooks Online Payroll users with employees in Maine are now configuring Maine Paid Family and Medical Leave (PFML) contributions inside the payroll settings, and the setup has generated recurring confusion around how to split the contribution rate between employer and employee.
Who Is Covered
Any employer with employees working in Maine is subject to the tax. The contribution structure depends on headcount. Employers with fewer than 15 employees are exempt from the employer share but must still account for a 0.5% total contribution rate, which the employer can either fund entirely or deduct from employee wages. Employers with 15 or more employees fall under a 1% total contribution rate, and the cost can be shared equally — 0.5% from the employer and 0.5% from the employee.
Employee count and the contribution rates for the following tax year are reported on the Quarter 3 Maine Paid Family Leave Quarterly Wage Report. Users must add their policy by October 1 to ensure the return reflects the correct employee count selection.
Creating the PFML Policy
The policy is created inside the payroll settings area, not in individual employee records. Users navigate to Settings, then select Payroll settings. From there, they locate the Maine Tax section and choose Edit. Under the Maine Paid Family and Medical Leave Tax (PFML) section, they select Start to begin defining a new policy.
The setup walks the user through selecting a coverage type and entering the Maine PFML account number issued by the state. Users then select the option to define rates, enter a policy name, and choose the effective start date of the policy.
Entering the Correct Percentages
This is where users most frequently go wrong. The percentage fields represent how the total contribution is divided — not the raw tax rate itself.
For employers with fewer than 15 employees, the total contribution is 0.5%. If the employer is funding the entire amount, they enter 50% in the Employer field and leave the Employee field at zero. If the employees are responsible for the full amount through wage withholding, the employer enters 50% in the Employee field instead.
For employers with 15 or more employees, the total contribution is 1%. An employer funding the program entirely enters 100% in the Employer field. If the cost is being split evenly with employees, the employer enters 50% in the Employer field and 50% in the Employee field.
After the rates are entered, users save the policy.
Assigning the Policy to Employees
Once the policy exists, it must be assigned to each Maine employee individually. Users go to the Payroll section, then to Employees, and select each covered employee. From the Tax withholding section, they choose Edit, then navigate to State withholding and select the option to assign a policy. They choose the policy name created in the previous step.
At this stage, users also set the specific withholding rate for that employee. If the employer is funding the program entirely, the employee rate is set to 0%. If the cost is being split, the employee’s portion is entered as a percentage between 0.1% and 0.5%. Employers who are exempt from any portion of the program — whether due to headcount or an approved private plan — enter 0% for the employee as well.
The assignment process is repeated for every Maine employee on the payroll.
Verifying the Setup
After assignment, users should confirm that the correct pay items have been generated. From the Employee Center, users double-click an employee name, select the Payroll Info tab, and open the Taxes dialog. Under the Other tab, the Maine Paid Family Leave items should appear. Selecting each item allows the user to review or adjust the rate.
Editing or Removing a Policy
If contribution rates need to change, users return to Settings, then Payroll settings, and edit the Maine Tax section. Under the PFML heading, they select Edit next to the policy they want to modify, adjust the rate, and save.
To remove a policy from an employee entirely, users open that employee’s State withholding settings, locate the assigned policy, and choose the option to unassign it. The change is confirmed in a follow-up prompt.
Users managing Maine payroll obligations in QuickBooks Online should complete policy setup well ahead of the October 1 deadline, since the employee count declared on the Quarter 3 report drives the contribution rate for the following tax year.