Working Mainers will notice lighter paychecks starting Wednesday, when a tax funding the state’s new paid family and medical leave program goes into effect with the new year.
That money will build up in Maine’s coffers until benefits are paid out under the family and medical leave program starting in May 2026. The state will be the 13th to have such a program under a Democratic-led measure folded into a budget signed by Gov. Janet Mills last year despite her 2022 campaign pledge to not raise taxes.
Here’s what you need to know about the program and the debate it is still prompting in Augusta as it reaches this major milestone.
The new tax will be 1 percent of wages for many Maine workers.
Virtually all workers in the state will be subject to the new tax. The size of it depends on the size of the employer. Those with 15 or more workers must contribute 1 percent of wages evenly split between employees and employers. Smaller employers do not have to pay the latter portion. The tax is expected to generate $360 million per year when fully implemented.
The new program will apply to 90 percent of Maine’s workforce, according to the liberal Maine Center for Economic Policy. Self-employed people and tribal governments can opt into benefits but do not have to. Public-sector union employees do not have to contribute to the fund until their current collective bargaining agreements expire.
Businesses have some alternatives. Starting in April, they can apply to the state to be exempt from the program as long as they offer a roughly equivalent private paid leave plan. Applying for these substitutions costs $250, and they are valid for three years.
Benefits under the program will change the workforce landscape.
Once the program is running, workers can take up to 12 weeks of paid leave per year in many circumstances, including the birth of a child, a medical condition and caring for family members with serious health conditions. Workers must generally provide 30 days’ notice of leave to employers and have job protection if they have been with their employer for four months.
Maine’s average weekly wage — which now sits just above $1,100 — is the maximum benefit under the program. A person making $40,000 will have more than 80 percent of wages replaced, while someone making $90,000 will be reimbursed at just over 60 percent, a June analysis from the Maine Motor Transport Association found.
The program will go forward despite ongoing arguments in the Legislature.
Mills, a Democrat, butted heads at first with the progressives who championed paid leave and threatened a referendum on the subject. Citing that potential vote and concessions made in the process, she signed off the measure. Rules for the program were finalized early this month.
Business groups have opposed the program since the legislative debate took shape. Recently, the Maine State Chamber of Commerce said businesses will be challenged by the short period between the rules coming out and the tax kicking in.
Democrats passed the program over Republican objections. While the majority party lost legislative seats in the November election, they still hung onto both chambers. That means the program is going to be implemented and is likely last for at least two more years.
It won’t stop Republicans from messaging against it. Rep. Josh Morris, R-Turner, recently introduced a bill to stop the tax and defund the program. He was rebuffed by Senate President Mattie Daughtry, D-Brunswick, who championed paid leave and said it is “not up for debate.”
