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 October 28, 2025
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This is an official communication from the Colorado Department of Labor and Employment’s
Family & Medical Leave Insurance Division.
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Welcome to our newsletter for the employer and business community. Here you’ll find everything your organization needs to know to effectively navigate FAMLI. Be sure to check your subscription preferences to get the updates you need! |
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 Spotlight: IRS Guidance & FAMLI News
As a reminder — if you are an employer with 10 or more employees, new IRS guidance means some FAMLI benefits will be treated differently for tax purposes, starting in 2026.
Our goal is simple: to support you by making these federal changes clear, accessible, and easy to manage.
Last month, we provided an overview of the guidance, what it meant for you, and how FAMLI is getting prepared.
This month, we want to highlight an important answer to one of your questions: the new IRS guidance does not make FAMLI benefits subject to state income tax. The IRS guidance updates rules for federal taxes, but has no impact on state income tax law. This means:
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No paid FAMLI leave benefits are taxable for Colorado state income tax purposes; and
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Employers should not increase the state income tax wages on the employee’s W-2 due to FAMLI premium payments.
Since our last newsletter, we’ve taken time to answer additional questions, schedule information sessions, and continue work on a toolkit for all your tax compliance needs. Continue reading to find out more — and be sure to bookmark last month’s newsletter for reference!
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NEW! Questions & Answers
We’re gathering questions and input from stakeholders across the state to make sure your new federal tax reporting responsibilities are as clear as possible. See last month’s questions and answers here.
Does the IRS guidance make medical leave benefit amounts attributable to the employer taxable for Colorado state income tax?
No. All FAMLI benefits — including medical leave benefits - are exempt from state income tax. The IRS guidance has no impact on this exemption. This means the paid medical leave benefits that will be taxable for FIT, FICA and FUTA should not be treated as taxable for Colorado state income tax purposes, and employers should not increase the state income tax wages on the employee’s W-2 due to medical leave premium payments.
What about Colorado state unemployment insurance?
State unemployment law incorporates all of FUTA's coverage, including third-party sick pay. This means the employer may be liable for taxes related to medical leave benefits and state unemployment insurance. For further guidance, speak with your tax advisor today.
FAMLI currently reports benefit payment amounts to employees on Form 1099G. In 2026, will FAMLI report taxable medical leave benefits on Form W-2 instead?
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In 2026, employers will be responsible for reporting the employer portion of FICA and FUTA taxes via their own Form 941 each quarter.
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In 2027, FAMLI will only issue 1099Gs for family leave benefits, not medical leave benefits.
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In 2027 Employers will begin reporting taxable medical leave benefits on the W-2 forms they issue to employees.
My company already sends in a Form 941 to the IRS on behalf of my clients. If FAMLI sends in Form 941 as well, won’t that lead to compliance issues due to duplicate reporting?
Both third party payers of sick pay (such as FAMLI) and employers are required to file form 941. The difference is that the Form 941 FAMLI files will include withheld income tax, while the form 941 filed by the employer will not.
That’s why FAMLI has prepared to send Form 8922 annually, as well. Per the IRS guidance, Form 8922 will be used “to reconcile differences between wages and taxes reported on Form 941 and wages and taxes reported on Forms W–2 arising from the payment of third-party sick pay in these circumstances.”
Overpayments made by FAMLI to our employees for medical leave will change our FICA liabilities. How will FAMLI communicate those overpayments to employers?
We’re still determining the best way to communicate those overpayments with you, and are considering multiple options, including messaging directly in your My FAMLI+ Employer portal. Check our next newsletter for updates!
What if the employee who received benefits no longer works for me? Will FAMLI still communicate their overpayments to me, and will I be responsible for reconciling their overpayments in my FICA reporting?
Yes — FAMLI will still communicate those overpayments to you. You will then be able to use the figures we send to reconcile your FICA report for your former employee.
When reporting medical leave overpayments, will the IRS require W2(c)s from the employer?
Because only you submit that wage information to the IRS, your tax advisor will be able to guide you through these requirements.
Your questions help all Colorado businesses thrive - email us yours at cdle_pr@state.co.us to get answers today.
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✅ Action Item 1: Please Make Sure Your Account Contact Information Is Up-To-Date
You heard it last month: FAMLI is currently working on enhancements to the MyFAMLI+ Employer portal to deliver third-party sick pay notices directly to your accounts, starting in 2026.
- Premium administrators, premium editors, and HR benefits administrators will have access to these notices directly in the portal.
Only those account users listed above will have access to these notices - and you can make sure the right team members, such as your finance staff, get updates fast by adding them as users on your My FAMLI+ Employer account.
Is Your Account User Information Up-To-Date?
Make sure by logging in to your MyFAMLI+ Employer account and verifying your account user information today.
✅ Action Item 2: Join an Information Session
Starting in November, join FAMLI as we discuss the IRS guidance and other FAMLI updates with local chambers of commerce and business groups across the state:
Links to join those meetings will be made public on our website and in upcoming communications soon.
FAMLI is also hosting live webinars every two weeks for all to join, starting in late November. Register to attend by filling out the interest form below!
✅ Action Item 3: Get Your Questions Answered In Our FAMLI & IRS Taxes Toolkit
Our goal remains simple: no surprises and easy change management.
That’s why we’re creating a digital Employer Toolkit, with resources to help you easily navigate the 2026 tax changes.
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New FAMLI & Taxes webpage - a one-stop resource dedicated to understanding the IRS guidance and how FAMLI is helping employers navigate it.
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Visual Flowcharts – Quick guides showing employer vs. third-party responsibilities for FICA and FUTA.
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Video Tutorials - How-to guides with step-by-step instructions on how to use the My FAMLI+ Employer portal to access your third-party sick pay reports.
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Downloadable FAQs & Reference Sheets – Printable summaries you can share with your payroll providers or HR teams.
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FAMLI Employer Handbook - Plain-language updates to everything you need to know about FAMLI, taxes, and the My FAMLI+ Employer portal.
The toolkit will be ready in the coming months. Want to make sure your business gets everything it needs? We’ll use questions and input from payroll partners, HR associates, and employers like you to build all our information documents.
Tell us what you want to know - and what document types would help your team most!
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 Looking Forward: What to Expect Next
With clear guides and early updates, you’ll have time to plan ahead, with no surprises.
Fall 2025 — Early Prep
From now until the new year: FAMLI begins communicating the IRS changes; employers begin educating themselves and preparing for the changes.
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FAMLI: releases new employer toolkit with plain-language guides and calendars; hosts webinars and other information sessions with chamber groups and other business associations.
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Employers with 10+ employees: meet with your tax advisors; attend FAMLI information sessions.
January 1, 2026 — New IRS Rules Begin
On this date: a portion of medical leave benefits for an employee’s own health condition tied to employers with 10+ employees begins to be treated as taxable wages.
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FAMLI: starts withholding the employee portion of FICA for medical leave claims; starts sending semi-weekly notices via mail, email, and potentially via MyFAMLI+ Employer.
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Employers with 10+ employees: begin remitting employer portion of FICA & FUTA taxes to the IRS.
Throughout 2026 — Ongoing Communication
From January 1 of the new year and after: Colorado business owners familiarize themselves with the semi-weekly notices and work with their tax advisors to remit their portion of FICA and FUTA taxes.
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FAMLI: sends semi-weekly notices; files forms 941 (quarterly) and 8922 (annually); holds recurring information sessions.
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Employers with 10+ employees: remits employer portion of FICA & FUTA taxes to the IRS; forwards all relevant FAMLI documentation to tax advisors.
January 15, 2027 — Year-End Statements
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Employers with 10+ employees: receive your first annual sick pay statement for the 2026 tax year.
- This statement lists each employee who received taxable medical leave benefits, plus all withholdings. You can hand this directly to your accountant or payroll provider.
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Put Your Business In The Spotlight
Colorado employers like you prove strong teams and strong communities go hand in hand. Share your FAMLI experience and let us highlight your leadership in delivering for your people and your business all at once.
Give your business the recognition it deserves. Fill out a Business Spotlight Form today!
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 By the Numbers
 We’re committed to making the employer experience with the FAMLI program as satisfying as possible. Last month, we fielded just over 3,600 support requests - and still dropped our average resolution time from 72 to 42 hours. Because we know — the less time you spend waiting, the more time you can spend on your people and your operations.
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Add FAMLI to Your Contacts
Make sure to add cdle_famli-alerts@state.co.us to your email contacts. Doing so helps ensure you receive important account updates right away, so you can act quickly if something needs your attention.
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FAMLI Resources
Need a hand navigating FAMLI? Find the required program notice, plus printable guidebooks, handouts, posters, and digital resources below — as well as user guides to make your FAMLI experience as easy as possible.
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Contact FAMLI
The FAMLI Contact Center is open 7:30 a.m. to 4:30 p.m. Monday through Friday.
The best time to call is between 7:30 and 10 a.m. You can reach us at 1-866-CO-FAMLI (1-866-263-2654) and for general questions at: CDLE_FAMLI_info@state.co.us.
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