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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
5

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

INTERNAL REVENUE BULLETIN

The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue
Bulletins are available at www.irs.gov/irb/.

We Welcome Comments About the Internal Revenue Bulletin

If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it,
we would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page
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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3A92e15ed65aa85be1. Public record. Not legal advice.