Model the Minnesota Paid Leave employer premium

changelog.d/mn-employer-paid-leave-premium.added.md

@@ -0,0 +1 @@
+Model the Minnesota Paid Leave employer premium, including the small employer rate and test (Minn. Stat. 268B.14, subds. 5a-5c), and include it in employer payroll taxes.

changelog.d/mn-employer-paid-leave-premium.removed.md

@@ -0,0 +1 @@
+Remove the Minnesota Paid Leave `employee_rate` parameter. The model now derives the employee portion from `rate`, `employer_minimum_share` and the `small_employer` shares, so reforms that set `employee_rate` must set those instead.

policyengine_us/parameters/gov/states/mn/tax/payroll/paid_leave/employer_minimum_share.yaml

@@ -0,0 +1,16 @@
+description: Minnesota sets this minimum share of the premium that employers pay under the Paid Leave program.
+values:
+  # Earlier years read the 2026 value; the zero rate keeps every amount at 0
+  # before 2026 unless a reform sets an earlier rate.
+  0000-01-01: 0.5
+  2026-01-01: 0.5
+
+metadata:
+  period: year
+  unit: /1
+  label: Minnesota Paid Leave employer minimum premium share
+  reference:
+    - title: Minnesota Statutes Section 268B.14, subdivision 3
+      href: https://www.revisor.mn.gov/statutes/cite/268B.14#stat.268B.14.3
+    - title: Minnesota Paid Leave, Premium rate and contributions ("employers can collect up to 0.44% from employees")
+      href: https://pl.mn.gov/resources/calculators/premium-rate-and-contributions

policyengine_us/parameters/gov/states/mn/tax/payroll/paid_leave/rate.yaml

@@ -0,0 +1,20 @@
+description: Minnesota sets this premium rate on taxable wages for an employer in both the family and medical benefit programs under the Paid Leave program.
+values:
+  0000-01-01: 0
+  # Statutory 0.7% (subd. 6), adjusted by the commissioner under subd. 7.
+  2026-01-01: 0.0088
+  2027-01-01: 0.0088
+
+metadata:
+  period: year
+  unit: /1
+  label: Minnesota Paid Leave premium rate
+  reference:
+    - title: Minnesota Statutes Section 268B.14, subdivisions 1, 6 and 7
+      href: https://www.revisor.mn.gov/statutes/cite/268B.14#stat.268B.14.1
+    - title: Minnesota DEED confirms Paid Leave premium rate
+      href: https://mn.gov/deed/newscenter/press-releases/?id=1045-670064
+    - title: Minnesota Paid Leave, Premium rate and contributions ("For 2026 and 2027, the Paid Leave premium rate is 0.88%")
+      href: https://pl.mn.gov/resources/calculators/premium-rate-and-contributions
+    - title: Minnesota DEED, Paid Leave premium rate unchanged for 2027 (July 31, 2026)
+      href: https://content.govdelivery.com/accounts/MNDEED/bulletins/422fdf7

policyengine_us/parameters/gov/states/mn/tax/payroll/paid_leave/small_employer/employer_minimum_share.yaml

@@ -0,0 +1,16 @@
+description: Minnesota sets this minimum share of the full premium rate that small employers pay under the Paid Leave program.
+values:
+  # Earlier years read the 2026 value; the zero rate keeps every amount at 0
+  # before 2026 unless a reform sets an earlier rate.
+  0000-01-01: 0.25
+  2026-01-01: 0.25
+
+metadata:
+  period: year
+  unit: /1
+  label: Minnesota Paid Leave small employer minimum premium share
+  reference:
+    - title: Minnesota Statutes Section 268B.14, subdivision 5a(b)(1)
+      href: https://www.revisor.mn.gov/statutes/cite/268B.14#stat.268B.14.5a
+    - title: Minnesota DEED, Paid Leave small employer premium rate designation ("Like large employers, small employers can deduct up to 0.44% of wages")
+      href: https://mn.gov/deed/assets/paid-leave-small-employer-premium-rate-designation-acc_tcm1045-716947.pdf#page=1

policyengine_us/parameters/gov/states/mn/tax/payroll/paid_leave/small_employer/max_average_wage_ratio.yaml

@@ -0,0 +1,16 @@
+description: Minnesota limits the small employer premium rate to employers whose average wage is at most this multiple of the state's average wage in covered employment under the Paid Leave program.
+values:
+  # Earlier years read the 2026 value; the zero rate keeps every amount at 0
+  # before 2026 unless a reform sets an earlier rate.
+  0000-01-01: 1.5
+  2026-01-01: 1.5
+
+metadata:
+  period: year
+  unit: /1
+  label: Minnesota Paid Leave small employer average wage limit ratio
+  reference:
+    - title: Minnesota Statutes Section 268B.14, subdivision 5a(a)(2)
+      href: https://www.revisor.mn.gov/statutes/cite/268B.14#stat.268B.14.5a
+    - title: Minnesota DEED, Paid Leave small employer premium rate designation
+      href: https://mn.gov/deed/assets/paid-leave-small-employer-premium-rate-designation-acc_tcm1045-716947.pdf#page=1

policyengine_us/parameters/gov/states/mn/tax/payroll/paid_leave/small_employer/max_headcount.yaml

@@ -0,0 +1,16 @@
+description: Minnesota limits the small employer premium rate to employers with at most this many employees under the Paid Leave program.
+values:
+  # Earlier years read the 2026 value; the zero rate keeps every amount at 0
+  # before 2026 unless a reform sets an earlier rate.
+  0000-01-01: 30
+  2026-01-01: 30
+
+metadata:
+  period: year
+  unit: person
+  label: Minnesota Paid Leave small employer maximum employees
+  reference:
+    - title: Minnesota Statutes Section 268B.14, subdivisions 5a(a)(1) and 5b
+      href: https://www.revisor.mn.gov/statutes/cite/268B.14#stat.268B.14.5a
+    - title: Minnesota DEED, Paid Leave small employer premium rate designation
+      href: https://mn.gov/deed/assets/paid-leave-small-employer-premium-rate-designation-acc_tcm1045-716947.pdf#page=1

policyengine_us/parameters/gov/states/mn/tax/payroll/paid_leave/small_employer/rate_share.yaml

@@ -0,0 +1,18 @@
+description: Minnesota sets the small employer premium rate at this share of the full premium rate under the Paid Leave program.
+values:
+  # Earlier years read the 2026 value; the zero rate keeps every amount at 0
+  # before 2026 unless a reform sets an earlier rate.
+  0000-01-01: 0.75
+  2026-01-01: 0.75
+
+metadata:
+  period: year
+  unit: /1
+  label: Minnesota Paid Leave small employer premium rate share
+  reference:
+    - title: Minnesota Statutes Section 268B.14, subdivision 5a(b)
+      href: https://www.revisor.mn.gov/statutes/cite/268B.14#stat.268B.14.5a
+    - title: Minnesota Paid Leave, Premium rate and contributions ("The Paid Leave small employer rate is 0.66%")
+      href: https://pl.mn.gov/resources/calculators/premium-rate-and-contributions
+    - title: Minnesota DEED, Paid Leave small employer premium rate designation
+      href: https://mn.gov/deed/assets/paid-leave-small-employer-premium-rate-designation-acc_tcm1045-716947.pdf#page=1

policyengine_us/parameters/gov/states/mn/tax/payroll/paid_leave/small_employer/state_average_annual_wage.yaml

@@ -0,0 +1,21 @@
+description: Minnesota uses this statewide average annual wage in covered employment for the small employer wage test under the Paid Leave program.
+values:
+  # Earlier years read the 2026 value; the zero rate keeps every amount at 0
+  # before 2026 unless a reform sets an earlier rate.
+  0000-01-01: 73_989
+  # Statewide average annual wage for 2025 ("$73,989 per year"), applied to
+  # 2026 premiums, whose basis period is October 2024 to September 2025.
+  2026-01-01: 73_989
+  # No Department of Employment and Economic Development figure for 2027
+  # premiums as of 2026-10-20, so the 2026 value carries forward; update it
+  # when the department issues 2027 small employer designations.
+
+metadata:
+  period: year
+  unit: currency-USD
+  label: Minnesota Paid Leave state average annual wage
+  reference:
+    - title: Minnesota Statutes Section 268B.14, subdivisions 5a(a)(2) and 5b(a)
+      href: https://www.revisor.mn.gov/statutes/cite/268B.14#stat.268B.14.5a
+    - title: Minnesota DEED, Paid Leave small employer premium rate designation, Key Terms ("The Statewide Average Annual Wage for 2025 was $73,989 per year")
+      href: https://mn.gov/deed/assets/paid-leave-small-employer-premium-rate-designation-acc_tcm1045-716947.pdf#page=2

policyengine_us/tests/core/test_payroll_contributions.py

@@ -78,6 +78,9 @@ def calculate(sim: Simulation, variable: str) -> float:
         pytest.param(
             "ME", "employer_total_me_paid_leave_taxable_wages", 4_000, id="ME"
         ),
+        pytest.param(
+            "MN", "employer_total_mn_paid_leave_taxable_wages", 4_000, id="MN"
+        ),
         pytest.param(
             "OR", "employer_total_or_paid_leave_taxable_wages", 4_000, id="OR"
         ),
@@ -131,6 +134,7 @@ def make_employer_total_simulation(
     employer_total_dc_paid_leave_taxable_wages: float = WAGES,
     employer_total_ma_paid_leave_taxable_wages: float = WAGES,
     employer_total_me_paid_leave_taxable_wages: float = WAGES,
+    employer_total_mn_paid_leave_taxable_wages: float = WAGES,
     employer_total_or_paid_leave_taxable_wages: float = WAGES,
     employer_total_vt_child_care_contribution_wages: float = WAGES,
     employer_total_wa_paid_leave_taxable_wages: float = WAGES,
@@ -182,6 +186,9 @@ def make_employer_total_simulation(
                     "employer_total_me_paid_leave_taxable_wages": {
                         PERIOD: employer_total_me_paid_leave_taxable_wages
                     },
+                    "employer_total_mn_paid_leave_taxable_wages": {
+                        PERIOD: employer_total_mn_paid_leave_taxable_wages
+                    },
                     "employer_total_or_paid_leave_taxable_wages": {
                         PERIOD: employer_total_or_paid_leave_taxable_wages
                     },
@@ -508,6 +515,14 @@ def test_employee_payroll_tax_zero_when_payroll_tax_abolished():
             },
             id="ME",
         ),
+        pytest.param(
+            "MN",
+            {
+                "mn_employer_paid_leave_contribution": 440,
+                "mn_employer_additional_state_payroll_tax": 440,
+            },
+            id="MN",
+        ),
         pytest.param(
             "OR",
             {
@@ -592,6 +607,143 @@ def test_small_employer_thresholds_zero_employer_paid_leave_share(
     assert calculate(sim, variable) == 0
 
 
+@pytest.mark.parametrize(
+    ("small_employer_minimum", "small_employee", "small_employer"),
+    [
+        # A small employer minimum above the 75% small employer premium
+        # leaves employees nothing ("the remaining portion, if any").
+        pytest.param(0.8, 0, 750, id="employee-floor"),
+        # A negative minimum can't make employees pay more than the premium.
+        pytest.param(-0.1, 750, 0, id="employee-cap"),
+    ],
+)
+def test_minnesota_paid_leave_shares_follow_the_parameters(
+    small_employer_minimum: float, small_employee: float, small_employer: float
+):
+    # The employee portion is derived from the rate and the employer minimums
+    # (Minn. Stat. 268B.14, subds. 3 and 5a(b)), so a reform of either reaches
+    # both sides.
+    paid_leave = "gov.states.mn.tax.payroll.paid_leave"
+    reform = Reform.from_dict(
+        {
+            f"{paid_leave}.rate": {
+                "2025-01-01.2025-12-31": 0.01,
+                "2026-01-01.2026-12-31": 0.01,
+            },
+            f"{paid_leave}.employer_minimum_share": {"2026-01-01.2026-12-31": 0.6},
+            f"{paid_leave}.small_employer.employer_minimum_share": {
+                "2026-01-01.2026-12-31": small_employer_minimum
+            },
+        },
+        country_id="us",
+    )
+    people = {
+        name: {
+            "age": {PERIOD: 30},
+            "employment_income": {"2025": WAGES, PERIOD: WAGES},
+            "employer_headcount": {"2025": headcount, PERIOD: headcount},
+            "employer_total_mn_paid_leave_taxable_wages": {PERIOD: WAGES},
+        }
+        for name, headcount in (("large", 100), ("small", 30))
+    }
+    sim = Simulation(
+        tax_benefit_system=CountryTaxBenefitSystem(reform=(reform,)),
+        situation={
+            "people": people,
+            "households": {
+                "household": {
+                    "members": list(people),
+                    "state_code": {"2025": "MN", PERIOD: "MN"},
+                }
+            },
+            "tax_units": {"tax_unit": {"members": list(people)}},
+            "spm_units": {"spm_unit": {"members": list(people)}},
+            "families": {"family": {"members": list(people)}},
+            "marital_units": {
+                f"{name}_marital_unit": {"members": [name]} for name in people
+            },
+        },
+    )
+
+    # Large: 1% premium, 40% of it deductible. Small: 75% * 1% premium.
+    assert sim.calculate("mn_paid_leave_premium", PERIOD) == pytest.approx([1_000, 750])
+    assert sim.calculate(
+        "mn_employee_paid_leave_contribution", PERIOD
+    ) == pytest.approx([400, small_employee])
+    assert sim.calculate(
+        "mn_employer_paid_leave_contribution", PERIOD
+    ) == pytest.approx([600, small_employer])
+    # The employer-level path reads the same derived rates.
+    assert sim.calculate(
+        "employer_total_additional_state_payroll_tax", PERIOD
+    ) == pytest.approx([600, small_employer])
+    # In 2025 the reform sets only the rate, so the shares keep their
+    # statutory values: the employer pays 1% - 0.5% = 0.5% of wages, or for
+    # a small employer 0.75% - (0.75% - 0.25%) = 0.25%.
+    assert sim.calculate("mn_paid_leave_premium", "2025") == pytest.approx([1_000, 750])
+    assert sim.calculate(
+        "mn_employer_paid_leave_contribution", "2025"
+    ) == pytest.approx([500, 250])
+
+
+def test_minnesota_small_employer_wage_limit_rounds_half_up():
+    # 150% * $73,991 / 4 = $27,746.625, which rounds half up to $27,746.63
+    # (half to even would give $27,746.62). In 2027, 150% * $73,989.02 / 4 =
+    # $27,745.8825, which rounds to $27,745.88 (rounding up would give
+    # $27,745.89).
+    reform = Reform.from_dict(
+        {
+            "gov.states.mn.tax.payroll.paid_leave.small_employer.state_average_annual_wage": {
+                "2026-01-01.2026-12-31": 73_991,
+                "2027-01-01.2027-12-31": 73_989.02,
+            },
+        },
+        country_id="us",
+    )
+    people = {
+        name: {
+            "age": {PERIOD: 30},
+            "employment_income": {PERIOD: WAGES},
+            "employer_headcount": {PERIOD: 10, "2027": 10},
+            "mn_paid_leave_employer_average_quarterly_wage": {
+                PERIOD: average_wage_2026,
+                "2027": average_wage_2027,
+            },
+        }
+        for name, average_wage_2026, average_wage_2027 in (
+            ("at_limit", 27_746.63, 27_745.88),
+            ("above", 27_746.64, 27_745.89),
+        )
+    }
+    sim = Simulation(
+        tax_benefit_system=CountryTaxBenefitSystem(reform=(reform,)),
+        situation={
+            "people": people,
+            "households": {
+                "household": {
+                    "members": list(people),
+                    "state_code": {PERIOD: "MN", "2027": "MN"},
+                }
+            },
+            "tax_units": {"tax_unit": {"members": list(people)}},
+            "spm_units": {"spm_unit": {"members": list(people)}},
+            "families": {"family": {"members": list(people)}},
+            "marital_units": {
+                f"{name}_marital_unit": {"members": [name]} for name in people
+            },
+        },
+    )
+
+    assert sim.calculate("mn_paid_leave_small_employer", PERIOD).tolist() == [
+        True,
+        False,
+    ]
+    assert sim.calculate("mn_paid_leave_small_employer", "2027").tolist() == [
+        True,
+        False,
+    ]
+
+
 @pytest.mark.parametrize(
     ("state_code", "expected"),
     [
@@ -637,6 +789,7 @@ def test_small_employer_thresholds_zero_employer_paid_leave_share(
             {
                 "mn_paid_leave_taxable_wages": 7_000,
                 "mn_employee_paid_leave_contribution": 30.8,
+                "mn_employer_paid_leave_contribution": 30.8,
             },
             id="MN",
         ),
@@ -962,6 +1115,7 @@ def test_new_york_mctmt_employer_tax(
         pytest.param("DE", 100, WAGES, 9_000, 400, id="DE"),
         pytest.param("MA", 100, WAGES, 9_000, 420, id="MA"),
         pytest.param("ME", 100, WAGES, 9_000, 500, id="ME"),
+        pytest.param("MN", 100, WAGES, 9_000, 440, id="MN"),
         pytest.param("OR", 100, WAGES, 9_000, 400, id="OR"),
         pytest.param("RI", 100, WAGES, 29_200, 61.32, id="RI"),
         pytest.param("VT", 100, WAGES, 9_000, 330, id="VT"),
@@ -996,6 +1150,7 @@ def test_employer_total_additional_state_payroll_tax(
         pytest.param("DE", 20, id="DE"),
         pytest.param("MA", 29.4, id="MA"),
         pytest.param("ME", 35, id="ME"),
+        pytest.param("MN", 30.8, id="MN"),
         pytest.param("OR", 28, id="OR"),
         pytest.param("RI", 8.4, id="RI"),
         pytest.param("VT", 13.2, id="VT"),
@@ -1014,6 +1169,7 @@ def test_employer_total_additional_state_payroll_tax_uses_state_specific_wage_ba
         employer_total_dc_paid_leave_taxable_wages=7_000,
         employer_total_ma_paid_leave_taxable_wages=7_000,
         employer_total_me_paid_leave_taxable_wages=7_000,
+        employer_total_mn_paid_leave_taxable_wages=7_000,
         employer_total_or_paid_leave_taxable_wages=7_000,
         employer_total_vt_child_care_contribution_wages=4_000,
         employer_total_wa_paid_leave_taxable_wages=7_000,