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.
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 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 |
|
| Exemptions |
Number of declared allowances (enter 1 if an employee or their spouse is blind to claim an additional allowance)
If certain criteria are met:
|
|
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 |
|
|
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 |
|
| 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
- Department of Revenue Business Homepage
- Massachusetts Business Taxes Page
- Unemployment Insurance for Employers Page
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.
Get Taxes Done Right, Without the Stress
We know there's a lot that goes into preparing and filing payroll tax forms. Save time and get support from our expert team. As a Registered Reporting Agent with the IRS, we can help prepare and file all the necessary forms you need to remain compliant - even in the face of changing legislation. Learn more here.