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Massachusetts Wage and Payroll Tax Facts

February 05, 2024

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.

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Table of Contents

  1. Massachusetts Minimum Wage Rates
  2. Massachusetts State Income Tax (SIT) Rates
  3. Massachusetts State Unemployment Insurance (SUI) Rates
  4. Massachusetts State Disability Insurance (SDI) Rates
  5. Miscellaneous Massachusetts Tax Information
  6. Massachusetts Employer Registration
  7. Additional Massachusetts Payroll Tax Resources

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:

The below information was last updated February 5, 2024. 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

Massachusetts State Income Tax (SIT) Rates

Massachusetts uses a flat tax of 5.00% regardless of an employee’s level of income, except for 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
  • S = Single
  • M = Married
  • H = Head of Household
Exemptions

Number of declared allowances (enter 1 if an employee or their spouse is blind to claim an additional allowance)

  • Combat pay
  • Farm labor
  • Domestic service
  • Fishing boat service
  • Peace Corps 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

If certain criteria are met:

  • Students
  • Certain nonresident interstate carrier employees
  • Persons exempt from federal taxes
  • Low-wage persons
  • Nonresident military spouses

Form W-4

Form W-4

Reconciliation Frequency

Annual

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*

 0.94% – 14.37%

Rates for New Employers
  • 1.45% (non-construction)
  • 5.55% (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 who live and work in different states are only required to pay taxes to the state where they live. Massachusetts currently has no reciprocal agreements with any other states.

This doesn’t mean, however, that interstate workers living in Massachusetts pay double. It’s federally illegal for two states to tax the same income. In most cases, the employee’s work state will credit or refund them at tax time based on the taxes they owe their home state. If the tax rates differ, the employee must cover the difference.

Paid Sick Leave (PSL) Taxes

The state of Massachusetts doesn't require employers to collect PSL taxes, but it does have a program providing such leave to eligible employees.

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
FAQs Earned Sick Time FAQ

*Unless employers opt to give more.
**If sick hours are not frontloaded.

Paid Family and Medical Leave (PFML) Taxes

Like SDI, Massachusetts's PFML program is funded via mandatory payroll deductions and employer contributions. Employers can request an exemption if they already provide this benefit, and employers with 24 or fewer employees don't 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 Details
Covered Employees All who have earned at least $6,300 (rounded down to nearest hundred dollars) in the last 4 completed calendar quarters, and 30 times the weekly benefit amount for which the employee would be eligible.
Covered Employers All not included on the state's list of excluded employers
Tax Rates
  • Employers with 24 or fewer employees: 0.46%
    • Medical Leave: 0.28%
    • Family Leave: 0.18%
  • Employers with 25 or more employees: 0.88%
    • Medical Leave (60/40 split between employers and employees): 0.70%
    • Family Leave: 0.18%
Maximum Taxable Earnings $168,600
FAQs FAQs for Employers

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

 MassTaxConnect Homepage Unemployment Services for Employers Homepage

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

 MassTaxConnect Homepage Commonwealth of Massachusetts Login Page

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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