These synopses are intended only as aids to the reader in

HIGHLIGHTS

OF THIS ISSUE





Bulletin No. 2025–7

February 10, 2025

These synopses are intended only as aids to the reader in

identifying the subject matter covered. They may not be

relied upon as authoritative interpretations.

EMPLOYEE PLANS

48E of the Code for any facility that is of a type or category

described in this annual table.

REG-124930-21, page 772.

Rev. Rul. 2025-4, page 758.

Withdrawal of a notice of proposed rulemaking that appeared

in the Federal Register on February 2, 2023, regarding coverage of certain preventive services under the Affordable

Care Act.

INCOME TAX

Rev. Proc. 2025-14, page 770.

This revenue procedure contains the first annual table issued

pursuant to section 45Y(b)(2)(C)(i). This table provides the

greenhouse gas emissions rates for eight different types or

categories of facilities which are described in § 1.45Y-5(c)

(2). Taxpayers must use this table for the purpose of determining eligibility for credits under section 45Y and/or section

Finding Lists begin on page ii.

This revenue ruling provides guidance regarding the income

and employment tax treatment of contributions and benefits

paid in certain situations under a state paid family and medical leave program, as well as the related reporting requirements. This revenue ruling provides guidance to the District

of Columbia and states that have mandatory paid family and

medical leave programs and for employees working in and

employers operating in those states.

Rev. Rul. 2025-5, page 767.

Federal rates; adjusted federal rates; adjusted federal longterm rate, and the long-term tax exempt rate. For purposes

of sections 382, 1274, 1288, 7872 and other sections of

the Code, tables set forth the rates for February 2025.

The IRS Mission

Provide America’s taxpayers top-quality service by helping

them understand and meet their tax responsibilities and

enforce the law with integrity and fairness to all.

Introduction

The Internal Revenue Bulletin is the authoritative instrument

of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service

and for publishing Treasury Decisions, Executive Orders, Tax

Conventions, legislation, court decisions, and other items of

general interest. It is published weekly.

It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application

of the tax laws, including all rulings that supersede, revoke,

modify, or amend any of those previously published in the

Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of

internal practices and procedures that affect the rights and

duties of taxpayers are published.

Revenue rulings represent the conclusions of the Service

on the application of the law to the pivotal facts stated in

the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices,

identifying details and information of a confidential nature are

deleted to prevent unwarranted invasions of privacy and to

comply with statutory requirements.

Rulings and procedures reported in the Bulletin do not have the

force and effect of Treasury Department Regulations, but they

may be used as precedents. Unpublished rulings will not be

relied on, used, or cited as precedents by Service personnel in

the disposition of other cases. In applying published rulings and

procedures, the effect of subsequent legislation, regulations,

court decisions, rulings, and procedures must be considered,

and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless

the facts and circumstances are substantially the same.

The Bulletin is divided into four parts as follows:

Part I.—1986 Code.

This part includes rulings and decisions based on provisions

of the Internal Revenue Code of 1986.

Part II.—Treaties and Tax Legislation.

This part is divided into two subparts as follows: Subpart A,

Tax Conventions and Other Related Items, and Subpart B,

Legislation and Related Committee Reports.

Part III.—Administrative, Procedural, and Miscellaneous.

To the extent practicable, pertinent cross references to these

subjects are contained in the other Parts and Subparts. Also

included in this part are Bank Secrecy Act Administrative

Rulings. Bank Secrecy Act Administrative Rulings are issued

by the Department of the Treasury’s Office of the Assistant

Secretary (Enforcement).

Part IV.—Items of General Interest.

This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.

The last Bulletin for each month includes a cumulative index

for the matters published during the preceding months. These

monthly indexes are cumulated on a semiannual basis, and are

published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

February 10, 2025 

Bulletin No. 2025–7

Part I

26 CFR 1.164-1: Deduction for Taxes. 

(Also: §§ 61, 162, 104, 105, 106, 3121, 3306, 3401,

6041, 6051, 7805, 1.61-1, 1.61-2, 301.7805-1)

Rev. Rul. 2025-4

ISSUES

What is the Federal income and

employment tax treatment of contributions and benefits paid in certain situations under a State paid family and medical leave (PFML) statute, and what are the

related reporting requirements?

FACTS

In 2021, State X enacted the State

X Paid Family and Medical Leave Act

(PFML Act), which became effective in

State X on January 1, 2022. The PFML

Act implemented a State-administered

family and medical leave program to provide wage replacement to workers for

periods in which they need to take time

off from work due to their own non-occupational injuries, illnesses, or medical

conditions, or to care for a family member

due to the family member’s serious health

condition or other prescribed circumstance. The PFML Act indicates that the

purpose of the statute is to provide a safety

net for all employees in State X when they

have personal or family caregiving needs

and to advance the public interest by promoting the health, safety, and welfare of

all residents of State X.

To fund State X’s provision of benefits under the PFML Act, all in-state

employers and employees are required to

make contributions with respect to each

employee to the State X Paid Family

and Medical Leave Fund (PFML Fund)

operated and administered by State X.

State X collects these contributions from

employers and deposits them into the

PFML Fund for the purpose of providing the family and medical leave benefits

described under the PFML Act to individuals covered by the PFML Act. These

contributions must be equal to a specified

percentage of each employee’s weekly

wages (computed in accordance with the

PFML Act), referred to as the “standard

contribution rate.” The State X Director

of Employment determines the State X

standard contribution rate for each plan

year, which is based on the calendar year,

before the beginning of such calendar

year. For 2025, the State X standard contribution rate is set at 1% of each employee’s weekly wages.1

Under the PFML Act, employers with

employees in State X are required to withhold and remit contributions from each

employee’s wages in an amount that is

no greater than 60% of the standard contribution rate (1%) multiplied by each

employee’s weekly wages. The PFML

Act also provides that these employers

must make contributions from their own

funds in an amount that is equal to 40% of

the standard contribution rate (1%) multiplied by each employee’s weekly wages.2

By operation of these rules, an employer

may voluntarily pay from its own funds

all or a portion of its employees’ otherwise mandatory contributions, rather

than withholding such amounts from the

employee’s wages (“employer pick-up”).

Under State X law, an employer pick-up is

not included in the employee’s wages for

purposes of determining the employee’s

weekly wages under the PFML Act.

As an alternative to employer and

employee contributions to the PFML

Fund, the PFML Act provides an option

whereby an employer may establish and

maintain a private plan for the payment

of family and medical leave benefits. An

employer establishing such a plan must

submit the plan for approval to the State

X Director of Employment. The plan must

provide employee benefits that are comparable to those required under the PFML

Act, and the benefits must be available

at a cost to employees not to exceed the

contributions otherwise required under the

PFML Act. Employees whose employer

maintains an approved private plan are

eligible for benefits only from the private

plan.3

The PFML Act provides wage replacement for qualifying family and medical

leave to any individual who earned at least

$2,500 from an employer for services as

an employee in State X during each of

four of the five quarters completed immediately prior to the period of leave (“eligible employee”). The PFML Act defines

qualifying family leave as time off from

work taken by an eligible employee for

any of the following conditions or events:

(1) to care for and bond with a child

during the first year after the child’s birth

or during the first year after the placement of the child through foster care or

adoption; (2) to care for a family member

(i.e., a child, spouse, parent, grandparent,

grandchild, sibling, or domestic partner)

with a serious health condition; (3) to deal

with certain qualifying exigencies defined

by State X law related to the covered

active duty or call to covered active duty

of the individual’s spouse, domestic partner, child, or parent in the Armed Forces

of the United States; and (4) to address

certain medical or non-medical needs of

an eligible employee’s child, spouse, parent, grandparent, grandchild, sibling, or

domestic partner arising from domestic

violence. The PFML Act defines qualifying medical leave as time off from work

taken by an eligible employee that is made

necessary by the individual’s own serious

health condition and requires the health

condition to be substantiated. The PFML

Act does not require that an employee

incur any medical expenses in order to

be eligible for medical leave benefits, and

State X does not collect any information

from employees related to any medical

expenses that an employee might have

incurred.

1

While the PFML Act imposes a single contribution rate to a fund for both family and medical leave benefits, some States impose different contribution rates for remittance into separate

family and medical leave funds.

2

Some State PFML statutes specify different contribution ratios for employers and employees depending on the size of the employer. The analysis in this revenue ruling would also apply to

those situations.

3

This revenue ruling does not address the Federal tax treatment of employers’ or employees’ contributions to private or self-insurance family or medical leave plans or the amounts received

by the employees as benefits under these plans.

February 10, 2025

758

Bulletin No. 2025–7

Under the PFML Act, an eligible

employee’s “weekly benefit amount” for

periods of qualifying family or medical

leave taken on or after January 1, 2025,

is equal to 80% of the employee’s average weekly wages as defined in the PFML

Act. Eligible employees can receive family leave or medical leave benefits, up to

12 weeks each, during the application year

(the 12-month period beginning with when

the employee applies for PFML benefits).

Family leave benefits and medical leave

benefits may not be provided concurrently

to an eligible employee but may be taken

during consecutive periods.

Situation 1. Employer’s and Employee’s

Contributions. Employer A is a corporation that employs 100 individuals in State

X, including Employee B. Employer A

uses the accrual method of accounting and

the calendar year as the taxable year for

Federal income tax purposes. Employee

B is an individual residing in State X.

Employer A employs Employee B for

the entire 2025 calendar year. For 2025,

Employee B’s weekly wages as defined

under the PFML Act are $2,000, totaling

$104,000 for the calendar year, as computed in accordance with the PFML Act.

Because State X set the standard contribution rate for 2025 at 1% of each employee’s weekly wages, Employer A remits a

total of $1,040 to the State X PFML Fund

in connection with Employee B’s employment. Of this total, and as required by the

PFML Act, during 2025 Employer A withholds and remits $624 from Employee B’s

wages and pays the remaining $416 out of

its own funds.

Situation 2. Family Leave Benefits.

Same facts as in Situation 1, except that

beginning in March 2026, Employee B

takes 12 weeks off as a result of one of

the conditions or events specified for family leave under the PFML Act. Employer

A continues to employ Employee B at

$2,000 per week in 2026, and Employee

B meets all other eligibility require-

ments under the PFML Act. Therefore,

Employee B qualifies to receive up to 12

weeks of family leave benefits from State

X in an amount equal to 80% of Employee

B’s average weekly wage calculated at the

beginning of Employee B’s period of family leave, that is, $1,600 ($2,000 X 80%)

per week. In 2026, Employee B takes no

other types of leave covered by the PFML

Act. Accordingly, State X pays Employee

B a total of $19,200 ($1,600 per week X

12 weeks) in family leave benefits in 2026.

Situation 3. Medical Leave Benefits.

Same facts as in Situation 1, except that

beginning in March 2026, Employee B

takes 12 weeks off as a result of Employee

B’s serious health condition that qualifies for medical leave benefits under the

PFML Act. Employer A continues to

employ Employee B at $2,000 per week

in 2026, and Employee B meets all other

eligibility requirements under the PFML

Act. Therefore, Employee B qualifies

to receive up to 12 weeks of medical

leave benefits from State X in an amount

equal to 80% of Employee B’s average

weekly wage calculated at the beginning of Employee B’s period of medical

leave, that is, $1,600 ($2,000 X 80%) per

week. In 2026, Employee B takes no other

types of leave covered by the PFML Act.

Accordingly, State X pays Employee B a

total of $19,200 ($1,600 per week X 12

weeks) in medical leave benefits in 2026.

Situation 4. Employer Pick-Up of

Employee Contributions. Same facts as

in Situation 1, except that, as permitted

under the PFML Act, Employer A withholds and remits $350 from Employee B’s

wages, an amount less than the $624 that

Employer A is otherwise required to withhold from Employee B’s wages. Employer

A voluntarily pays from its own funds the

remaining $274 of the employee’s otherwise required contribution amount, as an

“employer pick-up,” as well as the $416

that Employer A is required to pay under

the PFML Act.

Situation 5. Family Leave Benefits with

Employer Pick-Up of Employee Contributions. Same facts as in Situation 2, except

that, as in Situation 4, Employer A withholds and remits $350 from Employee

B’s wages in 2025, an amount less than

the $624 that it is otherwise required to

withhold from Employee B’s wages, and

voluntarily pays the difference from its

own funds.

Situation 6. Medical Leave Benefits

with Employer Pick-Up of Employee Contributions. Same facts as in Situation 3

except that, as in Situation 4, Employer A

withholds and remits $350 from Employee

B’s wages in 2025, an amount less than

the $624 that it is otherwise required to

withhold from Employee B’s wages, and

voluntarily pays the difference from its

own funds.

LAW

(1) Federal Income Tax Treatment of

Mandatory Contributions to Certain State

Funds

Section 162 provides a deduction for

all the ordinary and necessary expenses

paid or incurred during the taxable year

in carrying on a trade or business, including a reasonable allowance for salaries or

other compensation for personal services

actually rendered. See § 1.162-7.4

Subject to certain limitations,5 § 164(a)

(3) permits a taxpayer to claim a deduction for certain State, local, and foreign

income taxes paid or accrued during the

taxable year. Under the flush language of

§ 164(a), a taxpayer may also deduct taxes

incurred in carrying on a trade or business

activity. Generally, taxes may be deducted

only by the taxpayer upon whom that tax

is imposed. Section 1.164-1(a); Armentrout v. Commissioner, 43 T.C. 16, 19-21

(1964).

As a general rule, “[t]he intention of

Congress controls what law, federal or

state, is to be applied . . . Since the federal

Unless otherwise specified, all “section” or “§” references are to sections of the Code or the Treasury Regulations.

Under § 63 an individual can claim itemized deductions, such as the deduction under § 164 for certain state and local taxes, only if the individual elects to itemize deductions on that individual’s Federal individual income tax return. Generally, if the individual does not elect to itemize deductions, the individual will be limited to the deductions listed in § 63(b), including the

standard deduction. Further, even if an individual elects to itemize deductions, § 164(b)(6), as added by § 11042(a) of Public Law 115-97, 131 Stat. 2054 (December 22, 2017), commonly

referred to as the Tax Cuts and Jobs Act, limits an individual’s itemized deduction under § 164(a) (SALT deduction limitation) to $10,000 ($5,000 in the case of a married individual filing a

separate return) for the aggregate amount of certain “State and local taxes” paid during the calendar year. This SALT deduction limitation applies to taxable years beginning after December

31, 2017, and before January 1, 2026.

4

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Bulletin No. 2025–7

759

February 10, 2025

revenue laws are designed for a national

scheme of taxation, their provisions are not

to be deemed subject to state law ‘unless

the language or necessary implication of

the section involved’ so requires.” Helvering v. Stuart, 317 U.S. 154, 161 (1942)

(quoting United States v. Pelzer, 312 U.S.

399, 402-03 (1941)). Thus, principles

developed under Federal law, not State

interpretations or designations, determine whether a payment to the State or its

instrumentality falls within the meaning

of the terms “taxes” or “income taxes” for

purposes of § 164. See Rev. Rul. 79-180,

1979-1 C.B. 95; Rev. Rul. 76-215, 1976-1

C.B. 194; Rev. Rul. 71-49, 1971-1 C.B.

103; Rev. Rul. 61-152, 1961-2 C.B. 42.

For these purposes, a tax has been defined

as a mandatory, compulsory exaction or

levy imposed upon a taxpayer by the legislative body of a State or locality for the

purpose of generating government revenue. See Principal Life Ins. Co. v. United

States, 70 Fed. Cl. 144, 167-69 (2006); see

also Rev. Rul. 75-444, 1975-2 C.B. 66 (a

tax is an “enforced contribution, exacted

pursuant to legislative authority”). In this

sense, taxes are distinct from other levies

and fees that are imposed upon particular

taxpayers as a charge for the government’s

provision of a particular service or asset

or grant of a narrow benefit or right to

those taxpayers. Id. Thus, the courts have

held that taxes are those exactions that

operate to distribute among the general

public the burden and cost of government

operations and programs that benefit the

public-at-large. See Commonwealth Edison Co. v. Montana, 453 U.S. 609, 622-23

(1981). While a tax must be paid to the

government levying the tax, an enforced

contribution may be characterized as a tax

within the purview of § 164 even if it is

paid into a separate fund established by

the State rather than to the State’s general

fund if the separate fund is established for

public purposes and is used to discharge a

government function. See, e.g., Rev. Rul.

81-191, 1981-2 C.B. 49; Rev. Rul. 74-525,

1974-2 C.B. 411; Rev. Rul. 74-58, 1974-1

C.B. 180; and Rev. Rul. 71-49. Also, the

courts have clarified that the nature of

an otherwise mandatory tax will not be

altered by the State legislature’s decision

to provide its taxpayers with a discretionary alternative to the tax or to provide

narrow exemptions therefrom. Trujillo

v. Commissioner, 68 T.C. 670, 673-75

(1977) (holding that mandated employee

contributions to California State disability

fund are properly characterized as income

taxes under § 164(a)(3) even though the

State statute exempts certain employees

from its mandates, including employees

whose employers have established a private disability plan).

When a tax is tied to the occasion of a

taxpayer’s income, and the amount of that

tax is determined as a factor thereof, such

a tax is an “income” tax within the meaning of § 164(a)(3). Id. at 672; McGowan

v. Commissioner, 67 T.C. 599, 608-11

(1976) (a tax on wages is simply a tax

on a narrow band of the broad category

of gross income, and is still an income

tax). In addition, the IRS has held that a

compulsory contribution of a percentage

of gross wages imposed on employees

required to be withheld from employees’

salaries qualified as State income tax to

employees under § 164(a)(3). See Rev.

Rul. 89-16, 1989-1 C.B. 76 (amounts

withheld from the wages of employees for

contribution to the West Virginia Unemployment Compensation Trust Fund qualify as State “income taxes” and, therefore,

are deductible by the employees under

§ 164(a)(3)).6

In contrast, taxes imposed by the State

on the exercise of a privilege or the performance of a particular act—such as a

business transaction, consumption, or

manufacture or sale of certain commodities—are generally treated as excise

taxes. See, e.g., Flint v. Stone Tracy Co.,

220 U.S. 107, 158 (1911); Waxenberg v.

Commissioner, 62 T.C. 594, 603 (1974).

Excise taxes are deductible under § 164

if they are paid or accrued in the carrying

on of a trade or business, or other profit-seeking activity. See § 164(a) (flush language); Rev. Rul. 81-194, 1981-2 C.B. 54

(amounts paid or accrued by employers to

the California unemployment compensation and disability funds are State excise

taxes and may be deducted under § 164(a)

as taxes paid or accrued in carrying on a

trade or business).

In 1981, the IRS issued guidance on the

treatment of employees’ and employers’

contributions to temporary and non-occupational disability benefit programs

enacted in California, New Jersey, New

York, and Rhode Island. See Rev. Rul.

81-194 (California); Rev. Rul. 81-193,

1981-2 C.B. 52 (New Jersey); Rev. Rul.

81-192, 1981-2 C.B. 50 (New York); Rev.

Rul. 81-191 (Rhode Island). In general,

these revenue rulings address State statutes that provide weekly disability benefits based upon average weekly wages

to qualifying individuals who are totally

disabled and unable to perform any work

for remuneration as a result of an accident

or sickness not compensated under the

workers’ compensation laws. Also, under

these State statutes, both employers and

employees are required to make contributions to the respective State’s disability

fund from which the State would provide

these benefits. For the employee’s contributions, the employer is required to withhold the employee’s required contribution

from the employee’s wages at the time the

wages are paid. In addition, three of these

State statutes provide employers an alternative to the State’s disability benefit program whereby an employer is permitted to

establish and maintain self-insurance or a

private plan for the payment of disability

leave benefits.

Under these revenue rulings, the IRS

holds that State-mandated employee and

employer contributions to these disability

funds are properly characterized as taxes

levied by the respective State governments

under § 164. Specifically, the rulings conclude that mandatory amounts withheld by

an employer from an employee’s wages

are treated as the employee’s payment

of State income taxes and are deductible

by the employee under § 164(a)(3). The

rulings also conclude that mandatory

The fact that the amounts are withheld from an employee’s wages by the employer, rather than first being remitted to the employee to pay the tax directly, does not affect the amount of income

arising from such wages. See, e.g., Cohen v. Commissioner, 63 T.C. 267, 278-79 (1974), aff’d, 543 F.2d 725 (9th Cir. 1976) (holding that amounts withheld from employee’s pay under Civil

Service Retirement Act were part of the employee’s compensation); Tucker v. Commissioner, 69 T.C. 675, 678-79 (1978) (holding that employee was in receipt of taxable income when fine

was deducted directly from salary rather than collected after employee was paid).

6

February 10, 2025

760

Bulletin No. 2025–7

contributions paid by the employer with

its own funds are characterized as State

excise taxes paid or incurred in carrying

on a trade or business and are deductible

by the employer under the flush language

of § 164(a).

(2) Federal Income Tax Treatment of

Certain Payments and Benefits

Section 61(a) provides that, except as

otherwise provided in subtitle A of the

Code, gross income for Federal income

tax purposes “means all income from

whatever source derived” (Federal gross

income). See also § 1.61-1(a); § 1.612(a). The U.S. Supreme Court has held

that Federal gross income includes “undeniable accessions to wealth, clearly realized, and over which the taxpayers have

complete dominion.” Commissioner v.

Glenshaw Glass Co., 348 U.S. 426, 431

(1955).

State excise taxes required to be paid

to a State directly by an employer as a

result of the employer’s own liability

for such taxes are not included in the

employee’s gross income under § 61. In

contrast, amounts that are required to be

withheld from an employee’s wages and

remitted by an employer to the State to

satisfy the employee’s State tax liability

are includible in the employee’s Federal

gross income under § 61. See § 1.61-2(a)

(1). Similarly, where an employer voluntarily pays a tax that is the responsibility

of the employee, such as the employee’s

share of Federal Insurance Contributions

Act (FICA) tax, without deducting it from

the employee’s wages, these amounts are

included in the employee’s gross income.

See § 1.61-14(a) (another person’s payment of the taxpayer’s income tax constitutes gross income to the taxpayer unless

excluded by law); Old Colony Trust Co.

v. Commissioner, 279 U.S. 716, 729

(1929) (employer’s payment of employee’s income tax obligation in consideration of employee’s services for employer

constitutes income to employee); Rev.

Rul. 86-14, 1986-1 C.B. 304 (payments

by employer of employee’s taxes are

additional wages for FICA purposes, are

includible in employee’s gross income,

and are wages for purposes of income tax

withholding).

The Code provides various exclusions from gross income.7 Section 104(a)

(3) provides that, except in the case of

amounts attributable to (and not in excess

of) medical expense deductions allowed

under § 213 for any prior taxable year,

gross income does not include amounts

received through accident or health insurance (or through an arrangement having

the effect of accident or health insurance)

for personal injuries or sickness (other

than amounts received by an employee to

the extent such amounts are attributable to

contributions by the employer which were

not includible in the gross income of the

employee, or are paid by the employer).

Section 105(a) provides that amounts

received by an employee through accident or health insurance for personal injuries or sickness must be included in gross

income, except as otherwise provided

in § 105, to the extent such amounts (1)

are attributable to contributions by the

employer which were not includible in the

gross income of the employee, or (2) are

paid by the employer.

Section 105(b) provides that, except

in the case of amounts attributable to

(and not in excess of) deductions allowed

under § 213 for any prior taxable year,

gross income does not include amounts

referred to in § 105(a) if such amounts are

paid, directly or indirectly, to the taxpayer

to reimburse the taxpayer for expenses

incurred for the medical care (as defined

in § 213(d)) of the taxpayer, the taxpayer’s

spouse, and the taxpayer’s dependents and

children (as defined therein).

Section 105(e)(2) provides that, for

purposes of §§ 105 and 104, amounts

received from a sickness and disability

fund for employees maintained under the

law of a State or the District of Columbia

are treated as amounts received through

accident or health insurance.

The portion of the amounts received

under an accident or health plan that is

financed partially by an employer and that

are attributable to employer contributions

is determined under the rules of § 1.105-

1(c)-(e). Generally, in the case of individual insured arrangements, the portion

of the amount received by the employee

attributable to the employer’s contribution

is the amount that bears the same ratio to

the amount received as the portion of the

premiums paid by the employer for the

current policy year bears to the total premiums paid by the employer and employee

for the policy year. Section 1.105-1(d)(1).

In 1972 and 1975, the IRS issued guidance on the treatment of temporary and

non-occupational disability benefit payments under the program enacted in New

York. See Rev. Rul. 72-191, 1972-1 C.B.

45; Rev. Rul. 75-499, 1975-2 C.B. 43. The

guidance held that the employer contributions are excluded from employees’ gross

incomes, and that the benefits received by

current employees are therefore includible

in their gross incomes under § 105 except

as otherwise provided in that section, but

are excluded from their gross incomes

under § 104(a)(3) to the extent they are

attributable to the employees’ own contributions. See also Rev. Rul. 75-479,

1975-2 C.B. 44 (similar holding relating

to Hawaii program).8

(3) Federal Employment Tax Requirements

Sections 3101 and 3111 impose FICA

taxes on “wages,” as that term is defined

in § 3121(a). These taxes are imposed

both on the employer under § 3111(a) and

(b) and on the employee under § 3101(a)

and (b). Section 3121(a) generally defines

“wages” for this purpose as all remuneration for employment including the cash

value of all remuneration (including benefits) paid in any medium other than cash.

Section 3121(b) defines “employment”

for FICA purposes as any service, of whatever nature, performed by an employee for

the person employing him, with certain

specific exceptions. These definitions are

deliberately broad. United States v. Quality Stores, Inc., 572 U.S. 141, 146 (2014);

Social Security Bd. v. Nierotko, 327 U.S.

358, 365-66 (1946). Rules similar to the

FICA rules apply with respect to Federal

Unemployment Tax Act (FUTA) tax under

§§ 3301, 3306(b), and 3306(c).

Exclusions from income are construed narrowly, and taxpayers must bring themselves within the clear scope of an exclusion. Commissioner v. Schleier, 515 U.S. 323, 328 (1995).

Rev. Rul. 81-192 modified the portion of Rev. Rul. 72-191 relating to the deductibility of contributions by the employer, but it did not modify the portion of the ruling relating to the taxability

of benefit distributions or any other portion of the ruling.

7

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February 10, 2025

Section 3121(a) contains certain limited exceptions from wages for payments

from employment-based plans and other

arrangements. Section 3121(a)(2)(A),

for example, excludes any payment to

an employee on account of sickness or

accident disability received under a workers’ compensation law, and § 3121(a)

(4) excludes any payment on account of

sickness or accident disability received

more than 6 calendar months after the last

calendar month in which the employee

worked. Pub. L. No. 97-123, 95 Stat. 1659

(1981), eliminated the FICA exception

for payments from an employer plan on

account of sickness or accident disability. The legislative history states that “for

purposes of the taxes imposed by this

provision, payments made under a state

temporary disability insurance law shall

be treated as remuneration for service.”

H.R. Conf. Rep. No. 97-409, 14 (Dec.

14, 1981). Thus, unless they are excluded

under § 3121(a)(2) or § 3121(a)(4), disability leave benefit payments like those

described in Rev. Rul. 72-191 are FICA

wages to the extent they are includible in

gross income under § 105(a) and the regulations thereunder. Section 32.1(d)-(e).

There is no comparable rule for family

leave benefits under laws like the PFML

Act. The same principles apply with

respect to FUTA tax.

Section 3402(a) generally requires

every employer making a payment

of “wages,” as that term is defined in

§ 3401(a), to deduct and withhold from

these wages a tax determined in accordance with prescribed tables or computational procedures. Section 3401(a)

defines “wages” for this purpose as all

remuneration for services performed by

an employee for the employer, including

the cash value of all remuneration (including benefits) paid in any medium other

than cash, with certain specific exceptions. Wages generally include all payments by an employer of amounts includible in gross income under § 105(a) and

§ 1.105-1 to an employee under an accident or health plan for a period of absence

from work on account of personal injuries

or sickness. However, third-party payments of sick pay, as defined in § 3402(o)

9

and the regulations thereunder, are not

wages under § 3401 or § 31.3401(a)-1,

and therefore are not subject to income

tax withholding even if they are includible

in gross income. Section 31.3401(a)-1(b)

(8)(i)(a); see also § 31.3402(o)-3(h).9

Instead, employees may request withholding on a voluntary basis under § 3402(o).

See also § 31.3402(o)-3(a). There are no

comparable rules for third-party payments

of family leave benefits under laws like

the PFML Act.

(4) Information Reporting Requirements

Section 6041(a) generally requires that

all persons engaged in a trade or business and making payment in the course

of such trade or business to another person of rent; salaries; wages; premiums;

annuities; compensations; remunerations;

emoluments; or other fixed or determinable gains, profits, and income, of $600

or more in any taxable year, must make a

true and accurate return to the Secretary of

the Treasury or her delegate (Secretary).

Section 6041(d) provides that every

person required to make a return under

§ 6041(a) must furnish to each person with respect to whom such return is

required a written statement showing the

name, address, and phone number of the

person required to make such return, and

the aggregate amount of payments to the

person required to be shown on the return.

Section 1.6041-1(b)(1) provides that the

term “all persons engaged in a trade or

business,” as used in § 6041(a), includes

organizations the activities of which

are not for the purpose of gain or profit.

Thus, that term includes the organizations referred to in § 1.6041-1(i). Section

1.6041-1(i) provides that the United States

or a State, or political subdivision thereof,

or the District of Columbia, or any agency

or instrumentality of any one or more of

the foregoing must file information returns

on the Form 1099 Series to report certain

payments of $600 or more. The information returns must be made by the officer

or employee having control of such payments or by the officer or employee appropriately designated to make such returns.

See § 1.6041-1(i). If the State has a basis

for calculating the amount of its payment

that is income to the payee, it must report

that amount. See § 1.6041-1(c).

Section 6051(a) provides that every

person required to deduct and withhold

from an employee a tax under § 3101 or

3402, or who would have been required

to deduct and withhold a tax under § 3402

(determined without regard to subsection

(n)) if the employee had claimed no more

than one withholding exemption, or every

employer engaged in a trade or business

who pays remuneration for services performed by an employee, shall furnish

to each such employee in respect of the

remuneration paid by such person to such

employee during the calendar year, on or

before January 31 of the succeeding year,

a written statement showing the employee’s wages, amounts of tax withheld,

and certain other information. See also

§ 31.6051-1(a). Form W-2, Wage and Tax

Statement, is used by employers to report

to the employee these payments of wages,

other remuneration for services performed

by the employee, and amounts of tax

withheld. Section 6051(d) provides that a

duplicate of any statement made pursuant

to § 6051 and in accordance with regulations prescribed by the Secretary shall,

when required by regulations, be filed

with the Secretary. Section 31.6051-2(a)

generally provides that an employer must

file with the Social Security Administration a copy of each Form W-2 required

under § 31.6051-1 to be furnished by

the employer with respect to wages paid

during the calendar year. See also §§

6051(f) and 31.6051-3 for statements

required in case of sick pay paid by third

parties rather than employers and Notice

2015-6, 2015-5 I.R.B. 412, regarding

the reporting of employment taxes with

respect to sick pay paid by third parties.

ANALYSIS

Situation 1. Employer’s and Employee’s

Contributions. The $624 that Employer A

withholds from Employee B’s wages and

the $416 that Employer A pays from its

own funds are properly characterized as

State taxes because they are enforced contributions, exacted pursuant to State X’s

legislative authority in the exercise of its

Payments are considered made by the employer if a third party makes the payments as an agent of the employer. Section 31.3401(a)-1(b)(8)(i)(b).

February 10, 2025

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taxing power and imposed and collected

by State X for the purpose of raising revenue for public purposes. Even though

these amounts are not remitted into State

X’s general fund, they may be treated as

taxes under § 164 because they are paid

to a separate fund established by State X

for public purposes and used to discharge

a government function.

The $624 that Employer A withholds from Employee B’s wages is tied

to Employee B’s receipt of wages and is

determined as a factor thereof. As such,

this amount is an income tax within the

meaning of § 164(a)(3). Employee B may

deduct this amount as a State income tax

under § 164(a)(3) in 2025, the taxable

year in which such amount is withheld

from Employee B’s pay. However, this

deduction is available only if Employee

B itemizes these State taxes on Employee

B’s 2025 Federal income tax return, and

only to the extent such deduction does not

exceed the SALT deduction limitation provided under § 164(b)(6). Even though this

amount is withheld from Employee B’s

wages, because it satisfies Employee B’s

own tax liability under the PFML Act, this

amount is included in Employee B’s gross

income (and wages for Federal employment tax purposes under §§ 3121(a),

3306(b), and 3401(a)), and Employer A

must report it on Employee B’s Form W-2

in accordance with § 6051, for 2025.10

The $416 that Employer A pays from

its own funds is required because of

Employer A’s status as an employer under

the PFML Act and because the payment

is incurred in carrying on Employer

A’s business. As such, Employer A may

deduct this amount under § 164(a) (flush

language) as an excise tax paid or accrued

in carrying on its trade or business. This

amount is not included in Employee B’s

gross income for 2025 under § 61 because

it satisfies Employer A’s own tax liability under the PFML Act, and therefore

Employee B does not realize any accession to wealth from the payment. As such,

Employer A has no Federal information

reporting obligations with respect to this

amount.

Situation 2. Family Leave Benefits. The

$19,200 that State X pays to Employee B

as family leave benefits under the PFML

Act is included in Employee B’s Federal

gross income under § 61 because it provides Employee B with a clearly realized

accession to wealth and no exclusion

applies.11 None of the family leave benefits

paid to Employee B pursuant to the PFML

Act are excluded from gross income under

§ 104(a)(3) because family leave benefits

under the PFML Act may be paid to an eligible employee, for the benefit of the eligible employee, for a variety of conditions

or events that are unrelated to the employee’s own health condition, and the family

leave benefits that are paid to Employee

B are, in fact, paid for reasons unrelated

to Employee B’s own health condition.

Therefore, those family leave benefits are

not received from a sickness and disability

fund for employees within the meaning of

§ 105(e)(2), are not paid for personal injuries or sickness, and as a result, for purposes of §§ 104 and 105, cannot be treated

as amounts received through accident or

health insurance.

Although the entire $19,200 that

State X pays to Employee B as family

leave benefits is included in Employee

B’s gross income for Federal income tax

purposes, it does not constitute wages for

Federal employment tax purposes under

§§ 3121(a), 3306(b), and 3401(a), and is

neither sick pay, as defined in § 3402(o),

nor a disability leave benefit payment

like those described in Rev. Rul. 72-191.

Rather, family leave benefits are more

closely analogous to social security benefits partially included in gross income

under § 86 but not considered to have been

paid as remuneration from employment,

and therefore are not considered wages for

Federal employment tax purposes under

§§ 3121(a), 3306(b), and 3401(a).

State X must file with the IRS and furnish to Employee B a Form 1099 to report

these payments of fixed or determinable

income totaling $19,200 in accordance

with § 6041 and § 1.6041-1.

Situation 3. Medical Leave Benefits. As in Situation 2, the $19,200 that

State X pays to Employee B as medical

leave benefits under the PFML Act provides Employee B with a clearly realized

accession to wealth and is included in

Employee B’s Federal gross income under

§ 61 unless an exclusion applies. Unlike

in Situation 2, these amounts are excluded

from Employee B’s gross income under

§ 104(a)(3) except to the extent they are

attributable to Employer A’s contributions

that were not includible in Employee B’s

gross income. Amounts attributable to

Employer A’s contributions are included

in Employee B’s gross income under

§ 105 except as otherwise provided in that

section. Medical leave benefits under the

PFML Act may be paid only if time off

from work is necessary because of the

individual’s own serious health condition,

and the medical leave benefits that are

paid to Employee B are, in fact, paid as a

result of Employee B’s own serious health

condition.12 Therefore, those medical

leave benefits are received from a sickness

and disability fund within the meaning of

§ 105(e)(2), are paid for personal injuries

or sickness, and as a result, for purposes

of §§ 104 and 105, are treated as amounts

received through accident or health insurance.

As determined in Situation 1, Employer

A’s mandatory contributions to the PFML

Fund are properly characterized for Federal income tax purposes as State excise

taxes imposed on Employer A and are

therefore not included in Employee B’s

Federal gross income under § 61.

Some States’ PFML statutes provide that if an employer fails to withhold any part of the employee’s mandatory contribution from their pay, or if an employer fails to timely remit such

contributions to the State, then the employer is held liable for the employee’s share of such contribution. The inclusion of this or a similar provision in a State’s PFML statute would not change

the tax treatment of the employer’s or employee’s contributions in the situations described in this revenue ruling. Further, this revenue ruling does not address the tax treatment of contributions

or benefits in situations in which those provisions are triggered.

11

Section 85 provides that gross income includes unemployment compensation, which generally means any amount received under a law of the United States, or of a State, that is in the

nature of unemployment compensation. Neither the family leave benefits nor the medical leave benefits provided under the PFML Act are in the nature of unemployment compensation or are

designed to be a substitute for unemployment benefits. Therefore, § 85 does not apply to determine the tax treatment of contributions to or benefits provided under this program.

12

The IRS is of the view that, for purposes of § 104(a)(3), because of the special circumstances presented by a governmental program, including the absence of plan documents or insurance

contracts, a State with a program similar to the PFML Act may treat its program as consisting of two separate programs, one providing solely family leave benefits and one providing solely

medical leave benefits, regardless of whether both are provided under a single statute or whether both are paid from the same fund.

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February 10, 2025

For purposes of §§ 104(a)(3) and 105,

State X may treat its PFML program as if it

were an individual insured arrangement.13

Accordingly, because the PFML Act provides that employers must make contributions from their own funds in an amount

that is no less than 40% of the standard

contribution rate (1%) multiplied by each

employee’s weekly wages, and Employer

A pays these contributions to the PFML

Fund in accordance with these requirements, $7,680 ($19,200 X $416/$1,040)

of Employee B’s medical leave benefits

is included in Employee B’s gross income

under § 105 except as otherwise provided

in that section. The remaining $11,520

($19,200 x $624/$1,040) is excluded

from Employee B’s gross income under

§ 104(a)(3).14

The amount of Employee B’s medical leave benefits that is includible in

Federal gross income (i.e., $7,680) also

constitutes wages for Federal employment tax purposes under §§ 3121(a) and

3306(b), because it is a disability leave

benefit payment like those described in

Rev. Rul. 72-191, and therefore is subject to the requirements of § 32.1 (and

similar requirements under § 3306). It

is a third-party payment (by a party that

is not an agent of the employer) of sick

pay, as defined in § 3402(o), and is subject

to the requirements thereunder. See generally Notice 2015-6, 2015-5 I.R.B. 412

(describing the rules concerning responsibility for the withholding and payment

of employment taxes and for reporting

employment taxes and wages with respect

to third-party sick pay).

Situation 4. Employer Pick-Up of

Employee Contributions. The treatment

of the $416 that Employer A pays from

its own funds is the same as in Situation

1. However, Employer A is not permitted to deduct the $274 voluntary payment that Employer A pays to the PFML

Fund from its own funds as an excise tax

under § 164 because this amount is not a

tax on Employer A. Because Employer A

is permitted to withhold this $274 from

Employee B’s wages as Employee B’s

required contribution amount under the

PFML Act, Employer A’s payment of

this $274 cannot be characterized as a

mandatory, compulsory exaction or levy

imposed on Employer A. Rather, the

employer pick-up of $274 is a discharge

of Employee B’s mandatory contribution

under the PFML Act, (i.e., its State income

tax liability) by Employer A in connection

with the employer-employee relationship

and is treated as compensation for services that is taxable as gross income to the

employee. See Old Colony Trust Co., 279

U.S. at 716. Accordingly, Employer A’s

payment of $274 to the PFML Fund, on

behalf of Employee B, must be treated as

additional compensation to Employee B

under § 61.

Under State X law, the employer

pick-up is excluded from wages for

purposes of determining Employer A’s

and Employee B’s mandatory contributions. However, this exclusion does

not affect the Federal tax treatment

of the employer pick-up. See Stuart,

317 U.S. at 161. Thus, the amount

of the employer pick-up is included

in Employee B’s gross income (and

wages for Federal employment tax purposes under §§ 3121(a), 3306(b), and

3401(a)), and Employer A must report

it on Employee B’s Form W-2 in accordance with §§ 6041 and 6051, for 2025.

As compensation paid to an employee

in carrying on Employer A’s trade or business, Employer A may deduct the $274

employer pick-up as an ordinary and necessary business expense under § 162. See

Rev. Rul. 86-14 (payments by employer of

employee’s taxes are included in employee’s gross income and may be deducted

by employer as ordinary and necessary

business expenses under § 162). In addition, because this $274 is properly characterized as payment of Employee B’s

State income taxes under the reasoning in

Situation 1, Employee B may deduct the

$274 employer pick-up in addition to the

$350 withheld from Employee B’s wages

as State income taxes under § 164(a)(3)

in 2025. However, this deduction is available only if Employee B itemizes these

State taxes on Employee B’s 2025 Federal

income tax return, and only to the extent

such deduction does not exceed the SALT

deduction limitation provided under

§ 164(b)(6).

Situations 5 and 6. Family and Medical

Leave Benefits with Employer Pick-Up of

Employee Contributions. Because, under

the reasoning in Situation 4, the portions

of the total contributions attributable to

Employer A and to Employee B are not

changed as a result of Employer A’s voluntary pick-up of Employee B’s State

income tax liability under the PFML Act,

the analyses provided in Situation 2 and

Situation 3 would apply. Accordingly, the

treatment of the $19,200 that State X pays

to Employee B as family leave benefits

under the PFML Act in Situation 5, and

the treatment of the $19,200 that State X

pays to Employee B as medical leave benefits under the PFML Act in Situation 6,

are the same as in Situation 2 and Situation 3, respectively.

HOLDINGS

Under the facts provided in this revenue ruling:

(1) Mandatory employee contributions

that the employer withholds from the

employee’s wages and remits to the State

pursuant to the State’s PFML statute are

employee payments of State income tax.

Therefore, the employee may deduct these

amounts under § 164(a)(3) for the taxable

year in which such taxes are withheld by

the employer. However, the employee

may deduct these amounts only if the

employee itemizes deductions in computing taxable income under § 63 and only to

the extent that the employee’s deduction

for State income taxes is not limited by the

SALT deduction limitation under § 164(b)

(6). Even though these amounts are withheld from the employee’s wages, they are

included in the employee’s gross income

Thus, as under § 1.105-1(d)(1), State X may determine the portion of medical leave benefits attributable to Employer A's contributions for the taxable year by multiplying the total medical

leave benefits paid to Employee B in the taxable year by the ratio of Employer A’s mandatory contribution required by the PFML Act for the corresponding plan year to the total contributions

paid by Employer A and Employee B to State X for such year.

14

If a State PFML law does not specify the proportions of mandatory employee and employer contributions that are separately allocable to family leave benefits and to medical leave benefits,

then taxpayers may assume that such mandatory contributions are allocated equally to each type of benefit. If the State PFML law specifies the rate of such contributions allocable to each

type of benefit fund, then this allocation will control for Federal tax purposes.

13

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(and wages for Federal employment tax

purposes under §§ 3121(a), 3306(b), and

3401(a)), and the employer must report

these amounts on the employee’s Form

W-2 in accordance with § 6051.

(2) Mandatory employer contributions

required to be paid from the employer’s

own funds pursuant to the State’s PFML

statute are employer payments of State

excise tax. Therefore, the employer may

deduct these amounts as taxes incurred

in carrying on a trade or business in the

taxable year they are paid or accrued by

the employer under § 164(a) (flush language). Furthermore, these amounts are

not included in the Federal gross income

of the employee under § 61.

(3) Amounts paid to the employee by

the State as family leave benefits pursuant

to the State’s PFML statute are included in

the Federal gross income of the employee

under § 61. However, these amounts are

not wages for Federal employment tax

purposes under §§ 3121(a), 3306(b), and

3401(a). Nevertheless, the State must file

with the IRS and furnish to the employee

a Form 1099 to report payments of these

amounts if they aggregate $600 or more

in any taxable year in accordance with

§ 6041 and § 1.6041-1.

(4) Amounts paid to the employee by

the State as medical leave benefits that

are attributable to the employee’s contribution pursuant to the State’s PFML

statute are excluded from the employee’s gross income under § 104(a)(3) and

are neither wages for Federal employment tax purposes under §§ 3121(a)

and 3306(b) nor treated as sick pay, as

defined in § 3402(o). Amounts paid to

the employee by the State as medical

leave benefits that are attributable to

the employer’s contribution pursuant to

the State’s PFML statute are included in

Employee B’s gross income under § 105

except as otherwise provided in that section, are wages analogous to the disability leave benefit payments described in

Rev. Rul. 72-191 for Federal employment tax purposes under §§ 3121(a) and

3306(b), and are third-party payments

of sick pay, as defined in § 3402(o). The

State must comply with the employment tax and reporting requirements that

apply to such payments under § 32.1 and

other guidance.

(5) If, as permitted by the State’s

PFML statute, the employer voluntarily

pays from its own funds any part of the

employee’s otherwise required contribution, the amount of this employer pick-up

is deductible by the employer as a business expense under § 162. Moreover,

this amount is additional compensation

to the employee under § 61 and included

in wages for Federal employment tax

purposes under §§ 3121(a), 3306(b), and

3401(a), and the employer must report it on

the employee’s Form W-2 in accordance

with § 6051. However, the employee may

deduct the employer pick-up and mandatory contributions withheld from their

wages as State income tax under § 164(a)

(3) to the extent permitted under §§ 63 and

164(b)(6).

(6) If, as permitted by the State’s

PFML statute, the employer voluntarily

pays from its own funds any part of the

employee’s otherwise required contribution, the family leave benefit amounts

attributable to this employer pick-up are

included in the employee’s Federal gross

income under § 61, but are not wages for

Federal employment tax purposes under

§§ 3121(a), 3306(b), and 3401(a). Nevertheless, as with other family leave benefits, the State may be required to report the

amounts in accordance with § 6041 and

§ 1.6041-1.

(7) If, as permitted by the State’s PFML

statute, the employer voluntarily pays

from its own funds any part of an employee’s otherwise required contribution, the

medical leave benefit amounts attributable

to this employer pick-up are excluded

from the employee’s gross income under

§ 104(a)(3) and are neither sick pay nor

wages for Federal employment tax purposes under §§ 3121(a), 3306(b), and

3401(a).

The following tables summarize these

holdings.

Table 1. Summary of the Federal Income Tax Consequences of Contributions to State Paid Family and Medical Leave Programs

Types of contributions

Employer

contribution

Employee

contribution

Employer pick-up

of employee

contributions

Consequence to employer

Employer may deduct the employer

contribution as an excise tax under § 164.

Employer must include the employee

contribution as wages on employee’s

Form W-2.

Employer may deduct the employer

pick-up payment that employer pays

from employer’s funds as an ordinary

and necessary business expense under

§ 162.

Employer must include the employer

voluntary payment as wages on

employee’s Form W-2.

Bulletin No. 2025–7

Consequence to employee

Employee does not include the employer contribution in

employee’s Federal gross income.

The employee contribution is included in employee’s Federal

gross income as wages.

Employee may deduct the employee contribution as State

income tax under § 164, if employee itemizes deductions on

employee’s Federal income tax return, but only to the extent

the deduction for State tax paid does not exceed the SALT

deduction limitation provided under § 164(b)(6).

The employer pick-up is additional compensation to employee

and is included in employee’s Federal gross income as wages.

Employee may deduct the employer pick-up of the employee

contribution as State income tax under § 164, if employee

itemizes deductions on employee’s Federal income tax return,

but only to the extent the deduction for State tax paid does not

exceed the SALT deduction limitation provided under § 164(b)

(6).

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February 10, 2025

Table 2. Summary of the Federal Income Tax Consequences of Family and Medical Leave Benefits Paid by State Paid Family and

Medical Leave Programs

Type of benefits

Family leave

benefits

Medical leave

benefits

Amount attributable to employer contribution

Employee must include the amount attributable to the

employer contribution in employee’s Federal gross

income (employer contribution not previously included

in employee’s Federal gross income). This amount is not

wages.

Amount attributable to employee contribution

Employee must include the amount attributable

to the employee contribution, as well as to any

employer pick-up of the employee contribution,

in employee’s Federal gross income. This

amount is not wages.

State must file with the IRS and furnish to employee a

Form 1099 to report these payments.

Employee must include the amount attributable to the

employer contribution in employee’s Federal gross

income (employer contribution not previously included

in employee’s Federal gross income) except as otherwise

provided in § 105. This amount is wages.

State must file with the IRS and furnish to

employee a Form 1099 to report these payments.

The amount attributable to the employee

contribution, as well as to any employer pick-up

of the employee contribution, are excluded from

employee’s Federal gross income.

The sick pay reporting rules apply to the medical leave

benefits attributable to employer contributions. These

payments are third-party payments (by a party that is not

an agent of the employer) of sick pay.

EFFECT ON OTHER GUIDANCE

Rev. Rul. 81-194, Rev. Rul. 81-193,

Rev. Rul. 81-192, and Rev. Rul. 81-191

are amplified to include the holdings in

this revenue ruling that are applicable to

the facts in those rulings.

Rev. Rul. 72-191, as modified by Rev.

Rul. 81-192, is further modified. Rev.

Rul. 72-191 holds that employer contributions to a State nonoccupational disability

fund that is treated as accident or health

insurance are excluded from employees’

gross incomes under § 106, and that consequently they are not wages subject to

income tax withholding under § 3402. The

State nonoccupational disability program

addressed in Rev. Rul. 72-191 is similar

in material respects to the State PFML

program addressed in this ruling. Therefore, with respect to mandatory employer

contributions, Rev. Rul. 72-191 is further

modified to reflect holding (2) stating that

these contributions are excluded from

employees’ gross incomes under § 61 as

payments of the employer’s own tax obligations, and not as employer-provided

coverage under an accident or health plan

under § 106. In addition, with respect

to required employee contributions that

are voluntarily assumed and paid by the

February 10, 2025

employer, Rev. Rul. 72-191 is modified

to reflect holdings (5) and (7) stating that

the employer’s payments are not excluded

from employees’ gross incomes under

§§ 61 or 106, or from wages subject to

income tax withholding under § 3402,

and that, because they remain employee

contributions, the benefit payments attributable to those amounts are excluded

from the employee’s gross income under

§ 104(a)(3).

EFFECTIVE DATE

Subject to the transition period

described below, this revenue ruling is

effective for payments made on or after

January 1, 2025.

TRANSITION PERIOD

FOR ENFORCEMENT AND

ADMINISTRATION WITH RESPECT

TO CALENDAR YEAR 2025

Calendar year 2025 will be regarded

as a transition period for purposes of IRS

enforcement and administration of the

information reporting requirements and

other rules described below. This transition period is intended to provide States

and employers time to configure their

766

reporting and other systems and to facilitate an orderly transition to compliance

with those rules, and should be interpreted

consistent with that intent. In particular:

(1) For medical leave benefits a State

pays to an individual in calendar year

2025, with respect to the portion of the

medical leave benefits attributable to

employer contributions, (a) a State or an

employer is not required to follow the

income tax withholding and reporting

requirements applicable to third-party

sick pay, and (b) consequently, a State or

employer will not be liable for any associated penalties under § 6721 for failure to

file a correct information return or under §

6722 for failure to furnish a correct payee

statement to the payee.

(2) For medical leave benefits a State

pays to an individual in calendar year

2025, with respect to the portion of the

medical leave benefits attributable to

employer contributions, (a) a State or an

employer is not required to comply with

§ 32.1 and related Code sections (as well

as similar requirements under § 3306)

during the calendar year; (b) a State or

an employer is not required to withhold

and pay associated taxes; and (c) consequently, a State or employer will not be

liable for any associated penalties.

Bulletin No. 2025–7

(3) For calendar year 2025, an

employer is not required to treat amounts

the employer voluntarily pays from its

own funds of any part of an employee’s

otherwise required contribution to a State

paid family and medical leave program

as wages for Federal employment tax

purposes under §§ 3121(a), 3306(b), and

3401(a).

REQUEST FOR COMMENTS

Comments are requested on additional

situations and aspects of state PFML benefit programs not addressed in this revenue

ruling with respect to which the issuance

of further Federal tax guidance would be

helpful.

Comments should be submitted in

writing on or before April 15, 2025. Consideration will be given, however, to any

written comments submitted after April

15, 2025, if such consideration will not

delay the issuance of guidance. The subject line for the comments should include

a reference to Revenue Ruling 2025-4.

All commenters are strongly encouraged

to submit comments electronically. However, comments may be submitted in one

of two ways: (a) Electronically via the

Federal eRulemaking Portal at https://

www.regulations.gov (type IRS-20250012 in the search field on the https://

www.regulations.gov homepage to find

this Revenue Ruling and submit comments); or (b) By mail to: Internal Revenue Service, CC:PA:LPD:PR (Revenue

Ruling 2025-4), Room 5203, P.O. Box

Bulletin No. 2025–7

7604, Ben Franklin Station, Washington,

D.C., 20044. The Treasury Department

and the IRS will publish for public availability any comment submitted electronically or on paper to its public docket on

https://www.regulations.gov.

DRAFTING INFORMATION

The principal author of this revenue

ruling is Merrill D. Feldstein of the Office

of Associate Chief Counsel (Income Tax

& Accounting). However, additional personnel in the Office of Chief Counsel

and at the Treasury Department participated in the development of this revenue

ruling. For further information regarding

the application of §§ 61 and 164 under

this revenue ruling, contact Ms. Feldstein

of the Office of Associate Chief Counsel (Income Tax & Accounting) at (202)

317-5100 (not a toll-free number). For

further information regarding the application of §§ 104, 105, and 106 under this

revenue ruling, contact Jennifer Friedman

of the Office of Associate Chief Counsel

(Employee Benefits, Exempt Organizations, and Employment Taxes) at (202)

317-5500 (not a toll-free number). For

further information regarding the application of §§ 3121(a), 3306(b), and 3401(a)

under this revenue ruling, contact Michael

L. Gitlin, also of the Office of Associate Chief Counsel (Employee Benefits,

Exempt Organizations, and Employment

Taxes) at (202) 317-6798 (not a toll-free

number).

767

Section 1274.—

Determination of Issue

Price in the Case of Certain

Debt Instruments Issued for

Property

(Also Sections 42, 280G, 382, 467, 468, 482, 483,

1288, 7520, 7872.)

Rev. Rul. 2025-5

This revenue ruling provides various

prescribed rates for federal income tax purposes for February 2025 (the current month).

Table 1 contains the short-term, mid-term,

and long-term applicable federal rates (AFR)

for the current month for purposes of section

1274(d) of the Internal Revenue Code. Table

2 contains the short-term, mid-term, and

long-term adjusted applicable federal rates

(adjusted AFR) for the current month for purposes of section 1288(b). Table 3 sets forth

the adjusted federal long-term rate and the

long-term tax-exempt rate described in section 382(f). Table 4 contains the appropriate

percentages for determining the low-income

housing credit described in section 42(b)

(1) for buildings placed in service during the

current month. However, under section 42(b)

(2), the applicable percentage for non-federally subsidized new buildings placed in service after July 30, 2008, shall not be less than

9%. Finally, Table 5 contains the federal rate

for determining the present value of an annuity, an interest for life or for a term of years,

or a remainder or a reversionary interest for

purposes of section 7520.

February 10, 2025

AFR

110% AFR

120% AFR

130% AFR

AFR

110% AFR

120% AFR

130% AFR

150% AFR

175% AFR

AFR

110% AFR

120% AFR

130% AFR

Short-term adjusted AFR

Mid-term adjusted AFR

Long-term adjusted AFR

REV. RUL. 2025-5 TABLE 1

Applicable Federal Rates (AFR) for February 2025

Period for Compounding

Annual

Semiannual

Quarterly

Short-term

4.34%

4.29%

4.27%

4.78%

4.72%

4.69%

5.22%

5.15%

5.12%

5.66%

5.58%

5.54%

Mid-term

4.52%

4.47%

4.45%

4.98%

4.92%

4.89%

5.43%

5.36%

5.32%

5.89%

5.81%

5.77%

6.82%

6.71%

6.65%

7.97%

7.82%

7.75%

Long-term

4.86%

4.80%

4.77%

5.35%

5.28%

5.25%

5.84%

5.76%

5.72%

6.34%

6.24%

6.19%

Annual

3.29%

3.42%

3.67%

REV. RUL. 2025-5 TABLE 2

Adjusted AFR for February 2025

Period for Compounding

Semiannual

3.26%

3.39%

3.64%

Monthly

4.25%

4.67%

5.10%

5.52%

4.43%

4.87%

5.30%

5.74%

6.62%

7.70%

4.75%

5.22%

5.69%

6.16%

Quarterly

3.25%

3.38%

3.62%

Monthly

3.24%

3.37%

3.61%

REV. RUL. 2025-5 TABLE 3

Rates Under Section 382 for February 2025

Adjusted federal long-term rate for the current month

Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal

long-term rates for the current month and the prior two months.)

3.67%

3.67%

REV. RUL. 2025-5 TABLE 4

Appropriate Percentages Under Section 42(b)(1) for February 2025

Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after

July 30, 2008, shall not be less than 9%.

Appropriate percentage for the 70% present value low-income housing credit

8.09%

Appropriate percentage for the 30% present value low-income housing credit

3.47%

February 10, 2025

768

Bulletin No. 2025–7

REV. RUL. 2025-5 TABLE 5

Rate Under Section 7520 for February 2025

Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years,

or a remainder or reversionary interest

Section 42.—Low-Income

Housing Credit

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

February 2025. See Rev. Rul. 2025-5, page 767.

Section 280G.—Golden

Parachute Payments

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

February 2025. See Rev. Rul. 2025-5, page 767.

Section 382.—Limitation

on Net Operating Loss

Carryforwards and

Certain Built-In Losses

Following Ownership

Change

The adjusted applicable federal long-term rate

is set forth for the month of February 2025. See

Rev. Rul. 2025-5, page 767.

Section 467.—Certain

Payments for the Use of

Property or Services

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

February 2025. See Rev. Rul. 2025-5, page 767.

Section 468.—Special

Rules for Mining and Solid

Waste Reclamation and

Closing Costs

The applicable federal short-term rates are set

forth for the month of February 2025. See Rev. Rul.

2025-5, page 767.

Section 482.—Allocation

of Income and Deductions

Among Taxpayers

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

February 2025. See Rev. Rul. 2025-5, page 767.

5.4%

Section 483.—Interest on

Certain Deferred Payments

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

February 2025. See Rev. Rul. 2025-5, page 767.

Section 1288.—Treatment

of Original Issue Discount

on Tax-Exempt Obligations

The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month of

February 2025. See Rev. Rul. 2025-5, page 767.

Section 7520.—Valuation

Tables

The applicable federal mid-term rates are set

forth for the month of February 2025. See Rev. Rul.

2025-5, page 767.

Section 7872.—Treatment

of Loans With BelowMarket Interest Rates

The applicable federal short-term, mid-term,

and long-term rates are set forth for the month of

February 2025. See Rev. Rul. 2025-5, page 767.

Bulletin No. 2025–7

769

February 10, 2025

Part III

26 CFR 601.601: Rules and regulations.

(Also: Part I, §§ 45Y, 48E; 1.45Y-5(g).)

Rev. Proc. 2025-14

SECTION 1. PURPOSE

This revenue procedure, issued pursuant to § 45Y(b)(2)(C)(i) of the Internal

Revenue Code (Code) and § 1.45Y-5(g)1,

contains in Table 1 of this revenue procedure the annual table (Annual Table)

that sets forth the greenhouse gas (GHG)

emissions rates for certain types or categories of facilities. Taxpayers must

use this Annual Table for the purpose

of determining eligibility for a clean

electricity production credit determined

under § 45Y (§ 45Y credit) or a clean

electricity investment tax credit under §

48E (§ 48E credit) for any facility that

is of a type or category described in this

Annual Table.

SECTION 2. BACKGROUND

.01 Statutory Background. Sections

13701(a) and 13702(a) of Public Law 117169, 136 Stat. 1818, 1982-1987 (August

16, 2022), commonly referred to as the

Inflation Reduction Act of 2022 (IRA),

added §§ 45Y and 48E, respectively, to the

Code. Section 45Y(b)(1)(A) and § 48E(b)

(3)(A) provide, in part, that a qualified

facility must have a GHG emissions

rate that is not greater than zero. Section

45Y(b)(2) provides rules for determining

GHG emissions rates and § 48E(b)(3)(B)

(ii) provides that rules similar to the rules

of § 45Y(b)(2) apply for purposes of §

48E.

.02 Regulations governing GHG emissions rates. Section 1.45Y-5 provides

rules for determining the GHG emissions

rate of a facility used for the generation of

electricity for purposes of determining a

§ 45Y credit. Section 1.48E-5(g) provides

that the rules provided in § 1.45Y-5(g)

regarding this Annual Table apply for purposes of § 48E and § 1.48E-5.

(1) Additions or Removals of Facilities.

Future Annual Tables may add or remove

certain types or categories of facilities,

and any such change must be accompanied by an expert analysis, as required

in § 1.45Y-5(g)(2). Section 1.45Y-5(g)

(2) provides that, in connection with

the publication of the Annual Table, the

Secretary must publish an accompanying expert analysis that addresses any

types or categories of facilities added

or removed from the Annual Table, as

well as any changes to emissions determinations for any types or categories of

facilities in the Annual Table, since its

last publication. For facilities that do not

produce electricity through combustion

or gasification, as described in § 1.45Y5(b)(7) (Non-C&G Facilities), the applicable technical assessment, described in

§ 1.45Y-5(c)(1)(ii), will constitute this

expert analysis as provided in § 1.45Y5(c)(1),2 and for facilities that do produce electricity through combustion or

gasification, as described in § 1.45Y-5(d)

(C&G Facilities), a lifecycle analysis

(LCA) that is compliant with the requirements of § 1.45Y-5(d), (e), and (f) will

constitute the expert analysis. This expert

analysis must be prepared by one or more

of the National Laboratories, in consultation with other Federal agency experts

as appropriate, and must address whether

the addition or removal of types or categories of facilities from the Annual Table

complies with § 45Y(b)(2)(A) and (B)

and § 1.45Y-5(g)(2). The Department

of the Treasury (Treasury Department)

and the Internal Revenue Service (IRS)

view the requirement to publish an expert

analysis prepared by the National Laboratories of changes to the Annual Table

as essential to ensuring public accountability and adherence to sound scientific

principles. This requirement would also

ensure that the Secretary has a robust

record from foremost experts in LCA

assessment to inform any changes to the

Annual Table. If there are no changes to

the Annual Table in a future iteration, the

Treasury Department and the IRS will

notify taxpayers accordingly.

(2) Emissions rates greater than zero.

To provide clarity and certainty to taxpayers regarding eligibility, the Treasury

Department and the IRS may also include

in future Annual Tables the types or categories of facilities that have a GHG emissions rate that is greater than zero and

therefore do not meet the definition of a

qualified facility with respect to which a

taxpayer may claim a credit under §§ 45Y

or 48E.

(3) Timing rule. Under § 1.45Y-5(g)(1),

and except as provided in § 1.45Y-5(h), a

taxpayer that owns a facility described in

the Annual Table on the first day of the

taxable year in which the taxpayer’s §

45Y credit or § 48E credit is determined

with respect to that facility must use the

most recent Annual Table published as of

that date to determine the facility’s GHG

emissions rate for the taxable year.

(4) Reliance on Annual Table. For

purposes of § 45Y, notwithstanding the

timing rule provided in § 1.45Y-5(g)

(1), § 1.45Y-5(i) provides that taxpayers

may rely on the Annual Table in effect

as of the date a taxpayer began construction on a facility to determine the facility’s GHG emissions rate for any taxable

year that is within the 10-year period

described in § 45Y(b)(1)(B), provided

that the facility continues to operate as

a type of facility that is described in

the Annual Table for the entire taxable

year. For purposes of § 48E, § 1.48E5(j) provides that taxpayers may rely

on the Annual Table in effect as of the

date a taxpayer began construction on a

facility to determine the facility’s GHG

emissions rate, provided that the facility

continues to operate as a type of facility

that is described in the Annual Table for

the entire taxable year.

SECTION 3. THE ANNUAL TABLE

.01 First Annual Table. Table 1 of this

revenue procedure is the first Annual Table

Unless otherwise specified, all “Section” or “§” references are to sections of the Code or the Income Tax Regulations (26 CFR part 1).

Section 1.45Y-5(c)(1)(iii) provides an example of such a determination. The Treasury Department and the IRS anticipate that expert analyses for Non-C&G Facilities will be similar to this

example.

1

2

February 10, 2025

770

Bulletin No. 2025–7

and enumerates the following types or categories of facilities with a GHG emissions

rate that is not greater than zero, consistent with § 1.45Y-5(c)(2).

(1) Wind (including small wind properties).

(2) Hydropower.

(3) Marine and hydrokinetic.

(4) Solar (including photovoltaic and

concentrated solar power).

(5) Geothermal (including flash and

binary plants).

(6) Nuclear fission.

(7) Fusion energy.

(8) Waste energy recovery property

(WERP) that derives energy from a source

described in section 3.01(1) through (7) of

this revenue procedure.

.02 Background on table. This first

Annual Table includes information about

the types or categories of facilities that

the Secretary has determined have a GHG

emissions rate of not greater than zero.

The types or categories of facilities listed

in this first Annual Table are those listed

in § 1.45Y-5(c)(2), which identifies certain types or categories of facilities that

are categorically Non-C&G Facilities

with a GHG emissions rate that is not

greater than zero. Section 1.45Y-5(c)(2)

was finalized after the Treasury Department and the IRS considered public comments during the rulemaking process and

consulted extensively with scientific and

technical experts from across the Federal

government.

SECTION 4. EFFECTIVE DATE

This revenue procedure is effective

beginning on January 15, 2025, and until

the effective date of a subsequent Annual

Table.

SECTION 5. DRAFTING

INFORMATION

The principal author of this revenue

procedure is the Office of the Associate Chief Counsel (Energy, Credits, and

Excise Tax). For further information

regarding this revenue ruling, contact the

Office of the Associate Chief Counsel

(Energy Credits and Excise Tax) at (202)

317-6853 (not a toll-free number).

REV. PROC. 2025-14 TABLE 1

GREENHOUSE GAS EMISSIONS RATES

(Effective beginning on January 15, 2025, and until the effective date of a subsequent Annual Table.)

Type or Category of Facility

Wind

Hydropower

Marine and Hydrokinetic

Solar

Geothermal

Nuclear fission

Fusion energy

Waste energy recovery property*

Greenhouse Gas Emissions Rate

Not Greater than Zero

Not Greater than Zero

Not Greater than Zero

Not Greater than Zero

Not Greater than Zero

Not Greater than Zero

Not Greater than Zero

Not Greater than Zero

* Waste energy recovery property that derives energy from a source that is a type or category of facility

described in this table.

Bulletin No. 2025–7

771

February 10, 2025

Part IV

Notice of Proposed

Rulemaking

Coverage of Certain

Preventive Services Under

the Affordable Care Act

REG-124930-21

AGENCY: Internal Revenue Service,

Department of the Treasury; Employee

Benefits Security Administration, Department of Labor; Centers for Medicare &

Medicaid Services, Department of Health

and Human Services.

ACTION: Withdrawal of notice of proposed rulemaking.

SUMMARY: This document withdraws

a notice of proposed rulemaking that

appeared in the Federal Register on February 2, 2023, regarding coverage of certain preventive services under the Affordable Care Act.

DATES: As of [INSERT DATE OF

PUBLICATION IN THE FEDERAL

REGISTER], the notice of proposed

rulemaking that appeared in the Federal

Register on February 2, 2023, at 88 FR

7236 is withdrawn.

FOR FURTHER INFORMATION

CONTACT: Alex Krupnick, Internal

Revenue Service, Department of the

Treasury, at (202) 317–5500; Beth Baum

or Matthew Meidell, Employee Benefits Security Administration, Department

of Labor, at (202) 693–8335; David

Mlawsky, Centers for Medicare & Medicaid Services, Department of Health and

Human Services, at (410) 786–6851.

SUPPLEMENTARY INFORMATION:

Section 2713 of the Public Health

Service Act (PHS Act), as added by the

Affordable Care Act and incorporated into

the Employee Retirement Income Security Act and the Internal Revenue Code,

requires non-grandfathered group health

February 10, 2025

plans and health insurance issuers offering non-grandfathered group or individual

health insurance coverage to provide coverage of certain recommended preventive

services without imposing any cost-sharing requirements. These preventive services include, with respect to women,

under comprehensive guidelines supported by the Health Resources and Services Administration, certain contraceptive services. Current regulations include

exemptions and optional accommodations

for entities and individuals with religious

objections or non-religious moral objections to coverage of contraceptive services.

On February 2, 2023, the Departments

of the Treasury, Labor, and Health and

Human Services (HHS) (collectively,

the Departments) proposed rules (88 FR

7236) that sought to resolve long-running

litigation with regard to religious objections to providing contraceptive coverage, by respecting the objecting entities’

religious objections while also ensuring

that women enrolled in plans or coverage sponsored, arranged, or offered by

objecting entities could independently

obtain contraceptive services at no cost.

The proposed rules would have rescinded

the regulation providing for an exemption based on non-religious moral objections. The proposed rules would also have

established a new individual contraceptive

arrangement that individuals in plans or

coverage subject to a religious exemption

could use to obtain contraceptive services

at no cost directly from a provider or facility that furnishes contraceptive services,

without any involvement on the part of an

objecting entity.

The Departments requested comments

on all aspects of the proposed rules, as

well as on a number of specific issues. The

Departments received 44,825 comments

in response to the proposed rules from

a range of interested parties, including

employers, health insurance issuers, State

Exchanges, State regulators, unions, and

individuals. The Departments received

comments on specific proposals in the proposed rules, as well as general comments

on the proposals. The Departments also

received comments that were not related

to the proposals in the proposed rules.

772

The Departments have determined it

appropriate to withdraw the proposed rules

at this time to focus their time and resources

on matters other than finalizing these rules.

Additionally, in light of the volume and

breadth of scope of the comments received,

the Departments want to further consider

the proposals made in the proposed rules.

Moreover, should the Departments decide

in the future that it is a priority to move

forward with a rulemaking in this area,

the Departments want to ensure that they

will have the benefit of the most up-to-date

facts and information on these important

issues as the Departments consider how to

best implement the contraceptive coverage

requirements of PHS Act section 2713,

while respecting religious objections to

contraception. For these independently sufficient reasons, the Departments are withdrawing the proposed rules, and may propose new rules in the future, as appropriate

to meet these goals.

This withdrawal does not limit the

Departments’ ability to make new regulatory proposals in the areas addressed by

the withdrawn proposed rules, including

new proposals that may be substantially

identical or similar to those described

therein. In addition, this withdrawal does

not affect the Departments’ ongoing application of existing statutory and regulatory requirements or its responsibility to

faithfully administer the statutory requirements the proposed rules would have

implemented if finalized.

Douglas W. O’Donnell,

Deputy Commissioner,

Internal Revenue Service

Lisa M. Gomez,

Assistant Secretary,

Employee Benefits Security

Administration,

Department of Labor

Xavier Becerra,

Secretary,

Department of Health and Human

Services

(Filed by the Office of the Federal Register December 23, 2024, 4:15 p.m., and published in the issue

of the Federal Register for December 30, 2024, 89

FR 106393)

Bulletin No. 2025–7

Definition of Terms

Revenue rulings and revenue procedures

(hereinafter referred to as “rulings”) that

have an effect on previous rulings use the

following defined terms to describe the

­effect:

Amplified describes a situation where

no change is being made in a prior published position, but the prior position is

being extended to apply to a variation of

the fact situation set forth therein. Thus,

if an earlier ruling held that a principle

applied to A, and the new ruling holds that

the same principle also applies to B, the

earlier ruling is amplified. (Compare with

modified, below).

Clarified is used in those instances

where the language in a prior ruling is

being made clear because the language

has caused, or may cause, some confusion. It is not used where a position in a

prior ruling is being changed.

Distinguished describes a situation

where a ruling mentions a previously published ruling and points out an essential

difference between them.

Modified is used where the substance

of a previously published position is being

changed. Thus, if a prior ruling held that a

principle applied to A but not to B, and the

new ruling holds that it applies to both A

and B, the prior ruling is modified because

it corrects a published position. (Compare

with amplified and clarified, above).

Obsoleted describes a previously published ruling that is not considered determinative with respect to future transactions.

This term is most commonly used in a ruling

that lists previously published rulings that

are obsoleted because of changes in laws or

regulations. A ruling may also be obsoleted

because the substance has been included in

regulations subsequently adopted.

Revoked describes situations where the

position in the previously published ruling

is not correct and the correct position is

being stated in a new ruling.

Superseded describes a situation where

the new ruling does nothing more than

restate the substance and situation of a

previously published ruling (or rulings).

Thus, the term is used to republish under

the 1986 Code and regulations the same

position published under the 1939 Code

and regulations. The term is also used

when it is desired to republish in a single

ruling a series of situations, names, etc.,

that were previously published over a

period of time in separate rulings. If the

new ruling does more than restate the substance of a prior ruling, a combination of

terms is used. For example, modified and

superseded describes a situation where the

substance of a previously published ruling

is being changed in part and is continued

without change in part and it is desired to

restate the valid portion of the previously

published ruling in a new ruling that is

self contained. In this case, the previously

published ruling is first modified and then,

as modified, is superseded.

Supplemented is used in situations in

which a list, such as a list of the names of

countries, is published in a ruling and that

list is expanded by adding further names

in subsequent rulings. After the original

ruling has been supplemented several

times, a new ruling may be published that

includes the list in the original ruling and

the additions, and supersedes all prior rulings in the series.

Suspended is used in rare situations

to show that the previous published rulings will not be applied pending some

future action such as the issuance of new

or amended regulations, the outcome of

cases in litigation, or the outcome of a

Service study.

Abbreviations

The following abbreviations in current

use and formerly used will appear in

material published in the Bulletin.

A—Individual.

Acq.—Acquiescence.

B—Individual.

BE—Beneficiary.

BK—Bank.

B.T.A.—Board of Tax Appeals.

C—Individual.

C.B.—Cumulative Bulletin.

CFR—Code of Federal Regulations.

CI—City.

COOP—Cooperative.

Ct.D.—Court Decision.

CY—County.

D—Decedent.

DC—Dummy Corporation.

DE—Donee.

Del. Order—Delegation Order.

DISC—Domestic International Sales Corporation.

DR—Donor.

E—Estate.

EE—Employee.

E.O.—Executive Order.

ER—Employer.

Bulletin No. 2025–7

ERISA—Employee Retirement Income Security Act.

EX—Executor.

F—Fiduciary.

FC—Foreign Country.

FICA—Federal Insurance Contributions Act.

FISC—Foreign International Sales Company.

FPH—Foreign Personal Holding Company.

F.R.—Federal Register.

FUTA—Federal Unemployment Tax Act.

FX—Foreign corporation.

G.C.M.—Chief Counsel’s Memorandum.

GE—Grantee.

GP—General Partner.

GR—Grantor.

IC—Insurance Company.

I.R.B.—Internal Revenue Bulletin.

LE—Lessee.

LP—Limited Partner.

LR—Lessor.

M—Minor.

Nonacq.—Nonacquiescence.

O—Organization.

P—Parent Corporation.

PHC—Personal Holding Company.

PO—Possession of the U.S.

PR—Partner.

PRS—Partnership.

i

PTE—Prohibited Transaction Exemption.

Pub. L.—Public Law.

REIT—Real Estate Investment Trust.

Rev. Proc.—Revenue Procedure.

Rev. Rul.—Revenue Ruling.

S—Subsidiary.

S.P.R.—Statement of Procedural Rules.

Stat.—Statutes at Large.

T—Target Corporation.

T.C.—Tax Court.

T.D.—Treasury Decision.

TFE—Transferee.

TFR—Transferor.

T.I.R.—Technical Information Release.

TP—Taxpayer.

TR—Trust.

TT—Trustee.

U.S.C.—United States Code.

X—Corporation.

Y—Corporation.

Z—Corporation.

February 10, 2025

Numerical Finding List1

Bulletin 2025–7

Announcements:

2025-2, 2025-2 I.R.B. 305

2025-3, 2025-2 I.R.B. 306

2025-4, 2025-2 I.R.B. 306

2025-1, 2025-3 I.R.B. 431

2025-5, 2025-3 I.R.B. 433

2025-6, 2025-5 I.R.B. 526

Treasury Decisions:

10016, 2025-3 I.R.B. 313

10020, 2025-3 I.R.B. 408

10018, 2025-4 I.R.B. 446

10019, 2025-4 I.R.B. 482

10017, 2025-5 I.R.B. 517

10028, 2025-6 I.R.B. 660

Notices:

2025-1, 2025-3 I.R.B. 415

2025-2, 2025-3 I.R.B. 418

2025-4, 2025-3 I.R.B. 419

2025-5, 2025-3 I.R.B. 426

2025-3, 2025-4 I.R.B. 488

2025-7, 2025-5 I.R.B. 524

2025-9, 2025-6 I.R.B. 681

2025-10, 2025-6 I.R.B. 682

2025-11, 2025-6 I.R.B. 704

2025-13, 2025-6 I.R.B. 710

Proposed Regulations:

REG-117213-24, 2025-3 I.R.B. 433

REG-134420-10, 2025-4 I.R.B. 513

REG-105479-18, 2025-5 I.R.B. 527

REG-116610-20, 2025-5 I.R.B. 638

REG-115560-23, 2025-6 I.R.B. 716

REG-123525-23, 2025-6 I.R.B. 726

REG-124930-21, 2025-7 I.R.B. 772

Revenue Procedures:

2025-1, 2025-1 I.R.B. 1

2025-2, 2025-1 I.R.B. 118

2025-3, 2025-1 I.R.B. 142

2025-4, 2025-1 I.R.B. 158

2025-5, 2025-1 I.R.B. 260

2025-7, 2025-1 I.R.B. 301

2025-8, 2025-3 I.R.B. 427

2025-9, 2025-4 I.R.B. 491

2025-10, 2025-4 I.R.B. 492

2025-11, 2025-4 I.R.B. 501

2025-12, 2025-4 I.R.B. 512

2025-6, 2025-6 I.R.B. 713

2025-14, 2025-7 I.R.B. 770

Revenue Rulings:

2025-1, 2025-3 I.R.B. 307

2025-2, 2025-3 I.R.B. 309

2025-3, 2025-4 I.R.B. 443

2025-4, 2025-7 I.R.B. 758

2025-5, 2025-7 I.R.B. 767

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2024–27 through 2024–52 is in Internal Revenue Bulletin

2024–52, dated December 23, 2024.

1

February 10, 2025

ii

Bulletin No. 2025–7

Finding List of Current Actions on

Previously Published Items1

Bulletin 2025–7

A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2024–27 through 2024–52 is in Internal Revenue Bulletin

2024–52, dated December 23, 2024.

1

Bulletin No. 2025–7

iii

February 10, 2025

Internal Revenue Service

Washington, DC 20224

Official Business

Penalty for Private Use, $300

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