SACRAMENTO, Calif. — A new expanded paid family leave law that took effect Jan. 1 will “improve the lives of millions of Californians” and provide a “major boost” for workers taking time off to care for a loved one, according to Gov. Gavin Newsom.

But it will also mean a tax increase to help pay for the program.

The increases are paid via the state disability insurance plan, which is funded by a 1.2% payroll deduction tax withheld from workers’ paychecks. EDD increased the payroll deduction tax by 0.1% from 1.1% last year. KCRA first reported the tax increase last month.

Also helping to pay for the parental leave expansion is a lifting of the limit on who will pay the tax. All wage earners will now pay the tax. Previously, only those earning $153,164 or less were taxed.

Senate Minority Leader Brian Jones, a Republican, framed the increase as part of a partisan “wave of taxes and higher costs” that comes weeks after lawmakers pledged to address the state’s high cost of living in the upcoming legislative session.

“California workers will have more money withheld from their paychecks starting in 2025, thanks to Democrat lawmakers’ Senate Bill 951,” Jones said in a statement.

The Employment Development Department received about 321,000 paid family leave claims in the most recently available fiscal year, the 12-month period that ended June 30, 2023, and paid out 289,000 claims.

The increases also apply to workers who claim disability benefits. About 670,000 people received disability benefits in fiscal year 2022-2023, including 164,981 pregnancy claims.

The governor’s office referred a request for comment to EDD. Agency spokesperson Gareth Lacy pointed to an annual report, which said the program has paid out $16 million in benefits to 4.3 million people since July 2004, when the paid family leave program went into effect.

“Just as every driver on the road benefits from having auto insurance (whether or not they crash), all 18 million California workers benefit from insurance coverage for disability or paid family leave,” Lacy said via email. “The number of people filing is again expected to grow now that the programs will pay a higher portion of wages.”

Senate Bill 951, which provides up to 90% of pay for people who earn less than $63,000 annually and are taking parental leave, went into effect Wednesday.

The expanded law allows people to take up to eight weeks off for a pregnancy, birth, or care for a loved one, with an additional four weeks before birth permitted for expectant mothers. Sen. Maria Elena Duarzo, a Democrat, authored the bill, which Newsom signed in September 2022.

The benefit is phased out for employees who make more than $63,000. Those who earn more than $80,000 annually would receive roughly 70% of their weekly wages until their benefit reaches $1,681, the weekly maximum allowed by the law, according to EDD spokesperson Loree Levy.

Those who earn between $63,000 and $79,747.20 would receive a flat weekly $1,074 payment.

“This is the cutoff for the 90% wage rate so we start transitioning to the 70% rate,” Levy said in an email. “For claimants earning (between $63,000 and $80,000) the 70% would give them less payment than someone earning less so we pay everyone in that band $1,074.”

Previously, eligible workers could claim 60% to 70% of their pay.

The expanded benefit is calculated based on the person’s highest quarterly earnings five to 18 months before their claim start date.

For instance, if an employee earned $15,000 in their highest quarter, they could be eligible for a $1,039 weekly benefit, according to a state calculator. The average weekly benefit claim between July 2022 and June 2023 was $874, and the average time per claim was 7.18 weeks.

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