Massachusetts Wage and Payroll Tax Facts
June 16, 2023
Having to comply with unique state taxes and wage laws can make processing payroll doubly daunting. Here’s everything you need to know about these rates and laws for the state of Massachusetts.
The Bay State uses a minimum wage rate substantially higher than the rate required by the federal government, and the state also has a Paid Sick Leave program guaranteeing time off to employees within its borders.
When it comes to processing payroll, Massachusetts-based organizations must handle the following taxes in addition to those required by the federal government:
- Personal Income (a.k.a. State Income Tax)
- State Unemployment Insurance (SUI)
- Paid Family and Medical Leave (PFML)
The below information was last updated June 16, 2023. It is not intended as legal or tax advice.
Massachusetts Minimum Wage Rates
|
Wage Type |
Massachusetts Rates |
Federal Rates |
|
Minimum Wage |
$15.00 |
$7.25 |
|
Tipped Minimum Wage |
$6.75 |
$2.13 |
|
Actual Tip Credit |
$8.25 |
$5.12 |
|
Wage Type |
Massachusetts Rates |
Federal Rates |
|
Minimum Wage |
$15.00 |
$7.25 |
|
Tipped Minimum Wage |
$6.75 |
$2.13 |
|
Actual Tip Credit |
$8.25 |
$5.12 |
Massachusetts State Income Tax (SIT) Rates
Massachusetts uses a flat tax of 5.00% regardless of an employee’s level of income, with the exception of those whose annual taxable income is greater than $1 million. Such individuals must pay an additional 4.00% income tax.
|
Additional Massachusetts SIT Details |
|
|
Supplemental Withholding Computation |
5.00% |
|
Valid Filing Statuses |
|
|
Form W-4 |
|
|
Reconciliation Frequency |
Annual |
|
Additional Massachusetts SIT Details |
|
|
Supplemental Withholding Computation |
5.00% |
|
Valid Filing Statuses |
|
|
Form W-4 |
|
|
Reconciliation Frequency |
Annual |
SIT exemptions are the number of declared allowances an employee makes and can include:
- Combat pay
- Farm labor
- Fishing boat service
- Peace Corp service
- Not in the ordinary course of business
- Services by a citizen or nonresident alien for a foreign government
- Services (not for the U.S. government) by citizens living abroad
- Services by an ordained minister
- Services by a person under 18 in delivering newspapers
- Services not in the course of the employer's business paid other than in cash
- Certain magazine and newspaper vendors selling at a fixed price
- Volunteer firefighters and emergency medical responders
The following are also allowed exemptions, but certain criteria must first be met:
- Students
- Certain nonresident interstate carrier employees
- Persons exempt from federal tax
- Low-wage persons
- Nonresident military spouses
Massachusetts State Unemployment Insurance (SUI) Rates
SUI provides unemployment benefits to eligible workers who are unemployed through no fault of their own (as determined by state law) and meet the state’s eligibility requirements.
|
Massachusetts SUI Tax Details |
|
|
Taxable Wage Base |
$15,000 |
|
Employee Subject to Tax |
No |
|
Rates for Experienced Employers* |
0.56% – 8.627% |
|
Rates for New Employers |
1.45% (non-construction) |
|
COVID-19 Recovery Assessment Surcharge |
0.708% - 10.896% (based on employer's assigned UI rate) |
|
Workforce Training Fund Surcharge |
0.056% |
|
Medical Assistance Contribution Surcharge** |
0.12% - 0.34% |
|
Effective Period |
Calendar Year |
|
Voluntary Contributions Allowed |
Yes; must be made 30 days after receipt of rate notice |
|
Massachusetts SUI Tax Details |
|
|
Taxable Wage Base |
$15,000 |
|
Employee Subject to Tax |
No |
|
Rates for Experienced Employers* |
0.56% – 8.627% |
|
Rates for New Employers |
1.45% (non-construction) |
|
COVID-19 Recovery Assessment Surcharge |
0.708% - 10.896% (based on employer's assigned UI rate) |
|
Workforce Training Fund Surcharge |
0.056% |
|
Medical Assistance Contribution Surcharge** |
0.12% - 0.34% |
|
Effective Period |
Calendar Year |
|
Voluntary Contributions Allowed |
Yes; must be made 30 days after receipt of rate notice |
*Per Schedule A of the state's UI Tax Rate Schedule.
**New employers (operating for 3 years or less) are exempt.
Massachusetts State Disability Insurance (SDI) Rates
SDI benefits are funded by employees through mandatory payroll deductions from each paycheck. Massachusetts, however, doesn't require employers to collect an SDI tax.
Miscellaneous Massachusetts Tax Information
Reciprocal Agreement(s)
Reciprocal agreements are when workers only pay taxes in the state where they live, not the state where they work. Massachusetts currently has no reciprocal agreements with any other states.
Paid Sick Leave (PSL)
The state of Massachusetts doesn't require employers to collect PSL taxes but does have a program providing such leave to eligible employees. Employers can allow earned sick time to be paid out at the end of a benefit year.
|
Massachusetts PSL Details |
|
| Covered Employees | All employees whose primary work location is within the state |
| Accrual Method(s) | One hour of leave per 30 hours worked |
| Annual Accrual Cap | 40 hours* |
| Carryover Maximum | 40 hours** |
| 12-Month Accrual Cap | 40 hours |
| Frontloading Allowed | Yes |
| FAQ | Earned Sick Time FAQ |
|
Massachusetts PSL Details |
|
| Covered Employees | All employees whose primary work location is within the state |
| Accrual Method(s) | One hour of leave per 30 hours worked |
| Annual Accrual Cap | 40 hours* |
| Carryover Maximum | 40 hours** |
| 12-Month Accrual Cap | 40 hours |
| Frontloading Allowed | Yes |
| FAQ | Earned Sick Time FAQ |
*Unless employers opt to give more.
**If sick hours are not frontloaded.
Paid Family and Medical Leave (PFML)
Like SDI, PFML is a benefit funded via mandatory payroll deductions and employer contributions. Employers can request an exemption if they already provide this benefit, and employers with less than 25 employees do not have to pay the employer portion of the medical leave split. Employers covered by this program can also volunteer to cover more (or any) of the following rates.
|
Massachusetts PFML Tax Details |
|
| Taxable Earnings Maximum | $160,200 |
| Overall Contribution Rate | 0.63% |
| Medical Leave Rate | 0.52% (split 60/40 between employers and employees)* |
| Family Leave Rate | 0.11% (100% covered by employees) |
| Payments Due | Quarterly |
| Online Registration | |
| FAQ | FAQs for Employers |
|
Massachusetts PFML Tax Details |
|
| Taxable Earnings Maximum | $160,200 |
| Overall Contribution Rate | 0.63% |
| Medical Leave Rate | 0.52% (split 60/40 between employers and employees)* |
| Family Leave Rate | 0.11% (100% covered by employees) |
| Payments Due | Quarterly |
| Online Registration | |
| FAQ | FAQs for Employers |
*This equates to a .312% employer contribution and a .208% employee deduction.
Massachusetts Employer Registration
The agencies below can help with your state-based employer registration, including best practices, account numbers, and unemployment information. Contact the Department of Revenue for withholding tax topics and the Department of Labor & Workforce for unemployment tax topics.
|
Registration Details |
Department of Revenue |
Department of Labor & Workforce |
|
Phone |
(617) 887-6367 | (617) 626-5075 |
|
Online Registration |
https://mtc.dor.state.ma.us/mtc/_/ | https://uionline.detma.org/Employer/Revenue/Registration/EmployerRegistration/RegisterEmployer.ASPX |
|
Registration Instructions |
Online registration is required. Account number is issued in 2-3 days. | Online registration is required. Account number is issued during registration. |
|
Employer Self-Service Login |
https://mtc.dor.state.ma.us/mtc/_/ | https://uionline.detma.org/Employer/Core/Login.ASPX |
|
Requirements |
Each employer must make deposits using their Employer Assigned Filing Frequency. | Each employer must assign their payroll service with a Third-Party Administrator to file and pay on their behalf. |
|
Registration Details |
Department of Revenue |
Department of Labor & Workforce |
|
Phone |
(617) 887-6367 | (617) 626-5075 |
|
Online Registration |
https://mtc.dor.state.ma.us/mtc/_/ | https://uionline.detma.org/Employer/Revenue/Registration/EmployerRegistration/RegisterEmployer.ASPX |
|
Registration Instructions |
Online registration is required. Account number is issued in 2-3 days. | Online registration is required. Account number is issued during registration. |
|
Employer Self-Service Login |
https://mtc.dor.state.ma.us/mtc/_/ | https://uionline.detma.org/Employer/Core/Login.ASPX |
|
Requirements |
Each employer must make deposits using their Employer Assigned Filing Frequency. | Each employer must assign their payroll service with a Third-Party Administrator to file and pay on their behalf. |
Additional Massachusetts Payroll Tax Resources
This information is provided as a courtesy and may be updated at any time. It is not intended as legal or tax guidance. If you have questions or concerns, we encourage you to seek the advice of a qualified CPA, Tax Attorney, or Advisor.
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