Massachusetts Payroll Tax Guide (2026)

Massachusetts withholding is a flat 5% until wages cross $1,107,750, when the 4% surtax pushes it to 9%, and every employer also juggles PFML at 0.88%, an EMAC charge and a COVID recovery assessment bolted onto the unemployment rate.^[4]

10 min read • Reviewed by Rajanikant Patel CPA • Verified Oct 1, 2026 • Sources: DOR, DUA, IRS

Quick Facts

Massachusetts payroll at a glance

Massachusetts layers four state payroll items on employers: a 5% income tax withholding, unemployment insurance carrying a COVID recovery assessment, paid family and medical leave shared with employees, and two small health and training contributions.^[4]

State income tax withholding

5.00% flat ^[3]

UI taxable wage base

$15,000 per employee ^[4]

New employer UI rate

2.42% ^[4]

Experienced UI rate range

0.94%–14.37% ^[4]

Paid Family and Medical Leave employee contribution, withheld from employee

0.46%, $184,500 ^[9]

COVID-19 Recovery Assessment

0.178% to 2.716% ^[5]

Social Security wage base

$184,500 ^[2]

FUTA net rate

0.6% = $42 per employee ^[14]

State minimum wage

$15.00 per hour ^[11]

Local minimum wage ordinances

None ^[11]

UI registration trigger

An employer becomes subject after having one or more employees working at… ^[4]

Exempt salary threshold

$35,568 per year ^[13]

Book a Payroll Consultation Talk to a Payroll Expert

What changed for Massachusetts payroll in 2026

Six items moved for Massachusetts employers this year. Anything below is what have changed since the 2025 tables, so a rate card carried over from last year will be wrong in at least one place.

UI rates on Schedule E New employer rate 2.42% Surtax threshold $1,107,750 PFML holds at 0.88% PFML max benefit $1,230.39 Employer PFML share shifts in 2027

The COVID recovery assessment is separate from your UI rate: The Massachusetts rate notice carries two numbers: the Schedule E unemployment rate and a separate COVID-19 Recovery Assessment. Employers who budget only the UI rate come up short, because for 2026 the assessment adds 0.178% at the bottom of the schedule and 2.716% at the top. The effective rate an employer actually pays runs from 1.118% to 17.086% on the first $15,000 of wages.^[5]

Estimate

2026 Massachusetts payroll tax calculator

Enter one employee’s annual gross wages to see what the employer owes, what comes out of the paycheque, and the true cost of employment.

Massachusetts · 2026 rates · per employee, per calendar year

Annual gross wages ($)

Cash wages subject to payroll tax, before any withholding.

Your UI contribution rate

Your exact rate is on the Annual contribution rate notice, issued by January 31 each year.

Custom UI rate (%)

FUTA basis

FUTA is 6.0% less a 5.4% credit where the state has no outstanding federal loan.

Employer pays

UI, on first $15,000–

COVID-19 Recovery Assessment, on first $15,000–

Employer Medical Assistance Contribution (EMAC), on first $15,000–

Workforce Training Fund, on first $15,000–

Paid Family and Medical Leave employer share, on first $184,500–

FUTA, on first $7,000–

Social Security, 6.2%–

Medicare, 1.45%–

Employer payroll tax–

Withheld from the employee

Paid Family and Medical Leave employee contribution, 0.46%, to $184,500–

Social Security, 6.2%–

Medicare, 1.45%–

Additional Medicare, 0.9% over $200,000–

Withheld from employee–

True cost of employment–

Employer tax as % of wages–

Total payroll tax, both sides–

State income tax withholding is not included above: it depends on the employee’s Form M-4, Massachusetts Employee’s Withholding Exemption Certificate and filing status, so it cannot be estimated from gross pay alone.

Rates & Nexus

Payroll tax rates & the nexus question

Massachusetts runs 7 state payroll taxes. The table below is the whole state layer for 2026.^[4]

The state payroll taxes

Tax	Paid by	2026 rate	Wage base
UI	Employer	0.94%–14.37%; 2.42% new	$15,000
COVID-19 Recovery Assessment	Employer	0.178% to 2.716%	$15,000
Employer Medical Assistance Contribution (EMAC)	Employer	0.34%	$15,000
Workforce Training Fund	Employer	0.056%	$15,000
Paid Family and Medical Leave employer share	Employer	0.42%	$184,500
Paid Family and Medical Leave employee contribution	Employee	0.46%	$184,500
Income tax withholding	Employee	5.00% flat	No limit

Rate Schedule E is in effect for 2026. Adding the separate COVID-19 Recovery Assessment produces effective rates of 1.118% at the bottom of the schedule and 17.086% at the top. New construction industry employers pay 6.08%.^[4]

Supplemental wages have their own rate. Bonuses, commissions and other supplemental payments are withheld at 5.00% when paid separately from regular wages. That is a state rate only; federal supplemental withholding is a separate 22% layer.^[3]

Who has to register

An employer becomes subject after having one or more employees working at least one day a week for 13 or more weeks, or paying $1,500 or more in wages in any calendar quarter.^[4] Income tax withholding is administered separately by Massachusetts Department of Revenue, so most employers end up with two state account numbers, not one.

Multistate and remote employees

When an employee works in more than one state, the four-part test below decides which state the wages are reported to. The tests run in order: you stop at the first one that gives an answer.

1. Localisation of service→
2. Base of operations→
3. Place of direction & control→
4. Employee’s residence

One remote employee is usually enough. A single person working from home in Massachusetts generally creates an obligation to register and report wages here, even if the business has no office, property or customers in the state.

Confused by Massachusetts’s payroll withholding & filing rules?

We handle registration, filings, and year-end forms so your team runs payroll without the guesswork.

Ask a Payroll Specialist

Compliance

Registration & return filing

Registration is online and free. The unemployment account and, where one exists, the withholding account are opened separately and carry different numbers.^[4]

How to register

Cross the wage threshold→
Unemployment Services for Employers→
Receive account number→
Annual contribution rate notice, issued by January 31 each year→
File & deposit online

An employer becomes subject after having one or more employees working at least one day a week for 13 or more weeks, or paying $1,500 or more in wages in any calendar quarter.^[4]

Deposit schedule

Frequency is set by expected annual withholding. $100 or less files annually, 101 to $1,200 quarterly, 1,201 to $25,000 monthly, and more than $25,000 files quarterly but deposits within three business days of the 7th, 15th, 22nd and last day of each month.^[3]

Returns, reports & due dates

Form	What it is	Due
Quarterly employment and wage detail report filed in Unemployment Services for Employers	Quarterly unemployment return	April 30, July 31, October 31, January 31 (filings are due by 3 p.m.)
Form M-941, Employer’s Return of Income Taxes Withheld, filed through MassTaxConnect….	Income tax withholding returns	Frequency is set by expected annual withholding. $100 or less file
Annual reconciliation	Year-end withholding reconciliation	February 28
Form 941	Federal quarterly return	Last day of the month after quarter end
Form 940	Federal unemployment, annual	January 31
New hire report	Report of newly hired employees	Within 20 days of start date

Quarterly unemployment returns are due April 30, July 31, October 31, January 31 (filings are due by 3 p.m.). A return filed one day late is delinquent, and in most states the penalty attaches to the return, not the payment.^[4]

Pricing

Payroll Pricing

Simple, transparent pricing, no setup fees, no year-end surprises. One flat charge per pay run.

Your Biweekly Payroll Statement

Line items the big providers quietly bill for

NO HIDDEN FEES
CROWNGLOBE

Setup fee

one-time onboarding

billed
extra

Every payroll run

each pay cycle

billed
extra

Off-cycle payroll

corrections & bonuses

billed
extra

Year-end filings

W-2s, 1099s & more

billed
extra

All you actually pay

Per employee, per pay run

$6 /emp

Plus a flat $40 minimum per pay run. That’s the whole bill.

Get Started with Payroll See What’s Included

Wage Base

Subject wages vs. exempt payments

Not every dollar an employee receives is a taxable wage. The split below governs what goes into the unemployment wage base and what is reported at year end.^[4]

Subject wages

Salaries, hourly pay, overtime and piece rates
Commissions, bonuses and incentive pay
Most cash tips reported by the employee
Vacation, holiday and paid sick leave when taken as wages
Severance and payments in lieu of notice
The cash value of meals and lodging provided as compensation
Employer contributions to a non-qualified deferred compensation plan
Wages subject to the employee-paid contributions listed above

Not subject

Reimbursements of genuine business expenses under an accountable plan
Employer contributions to a qualified retirement plan
Employer-paid premiums for accident and health insurance
Most third-party sick pay after the sixth calendar month
Payments to a genuine independent contractor
Workers compensation benefits

The wage base is per employer, per year, not per job. If you hire someone in August who already earned $15,000 elsewhere, your unemployment clock still starts at zero. The one exception is a successor employer taking over an existing payroll, who inherits the wages already paid.

Reference

Glossary of key terms

Taxable wage base: The slice of each employee’s annual pay that unemployment tax is calculated on. In Massachusetts that is $15,000 for 2026. Earnings above it are still wages, they are simply no longer taxed for unemployment.
Paid Family and Medical Leave employee contribution: An employee-funded contribution withheld from pay at 0.46%. It is the employee’s money, so it is withheld rather than paid by the employer, but the employer is responsible for remitting it.
Experience rating: The method Massachusetts Department of Unemployment Assistance uses to set each employer’s own unemployment rate from its history of claims. Employers with fewer charged claims move down the schedule; those with more move up.
New employer rate: The rate assigned before an employer has enough history to be experience rated. It normally applies for two to three years, then the account moves onto the experience schedule.
Form M-4, Massachusetts Employee’s Withholding Exemption Certificate: The state withholding certificate. It sets how much income tax comes out of each cheque and is filed with the employer, not with Massachusetts Department of Revenue.
Reserve account: The running balance of contributions an employer has paid in, less the benefits charged against it. The ratio of that balance to taxable payroll is what drives the assigned rate.
Successor employer: A business that acquires another’s payroll may inherit both its experience rate and the wages already paid toward the wage base for the year. Getting this wrong is a common acquisition error.
Localisation of service: The first of four tests deciding which state a multistate employee’s wages are reported to. If substantially all the work is in one state, that state wins and the remaining tests are never reached.
FUTA credit reduction: A reduction in the 5.4% federal unemployment credit applied to states that have carried an outstanding federal loan for two or more consecutive Januaries. It raises the effective FUTA rate and is settled each November.
Supplemental wages: Bonuses, commissions, awards and similar payments made outside the regular payroll cycle. Many states set a separate flat withholding rate for them.

Federal, State & Local

Massachusetts payroll tax, layer by layer

Federal tax applies everywhere and is the larger number. The state layer is what changes when you cross a border.

Layer 1: Federal

Tax	Rate	2026 base
Social Security	6.2% each side	$184,500
Medicare	1.45% each side	No limit
Additional Medicare	0.9% employee only	Over $200,000
FUTA, standard	0.6% net	$7,000
Federal income tax	Per Form W-4	No limit

Massachusetts has no FUTA credit reduction for 2026, so the standard 0.6% net rate applies, $42 per employee. The final list is not published until 10 November 2026.^[14]

Layer 2: State

Tax	Rate	2026 base
UI, new employer	2.42%	$15,000
UI, experienced	0.94%–14.37%	$15,000
COVID-19 Recovery Assessment	0.178% to 2.716%	$15,000
Employer Medical Assistance Contribution (EMAC)	0.34%	$15,000
Workforce Training Fund	0.056%	$15,000
Paid Family and Medical Leave employer share	0.42%	$184,500
Paid Family and Medical Leave employee contribution, employee	0.46%	$184,500
Income tax, standard	5.00% flat	No limit
Income tax, supplemental	5.00%	No limit

Layer 3, county & city: no payroll tax, but a wage floor

No county or city in Massachusetts levies its own payroll or income tax withheld by employers. The local layer shows up as minimum wage, not as tax.^[11]

The state minimum wage is $15.00 an hour, effective 2023-01-01. The tipped cash wage is $6.75. No local ordinance sets a higher floor. No Massachusetts municipal minimum wage rates were identified for 2026, so the statewide rate applies across the commonwealth. None scheduled. The January 1, 2023 step was the last of a five year schedule, and any further increase requires new legislation or a ballot question.^[11]

Overtime exemption is a separate test. A salaried employee is exempt from overtime only above $35,568 a year ($684.00 a week) federal FLSA, and only if the duties test is also met. Paying a salary is not by itself enough.^[13]

FAQ

Massachusetts payroll FAQs

For employers with 25 or more covered individuals the total is 0.88% of eligible wages. All of the 0.18% family leave portion may be withheld from the employee, plus up to 40% of the 0.70% medical leave portion, which is 0.28%, giving an employee share of 0.46% and an employer share of 0.42%. Employers with fewer than 25 covered individuals owe 0.46% in total and may withhold all of it from employees.

Individual contributions are capped by the Social Security taxable maximum, which is $184,500 of wages in 2026. Once an employee’s eligible wages pass that figure, no further PFML contribution is due from either side for that year. The maximum weekly PFML benefit in 2026 is $1,230.39.

Only if you had six or more employees in the quarter. EMAC is 0.34% of the first $15,000 of each employee’s wages, so at most $51 per employee a year. Employers newly subject to unemployment contributions are exempt for about their first three years, then pay 0.12% in year four and 0.24% in year five before reaching the full rate.

The rate notice shows a Schedule E unemployment rate plus a separate COVID-19 Recovery Assessment. For 2026 the UI portion runs from 0.94% to 14.37% and the assessment adds 0.178% to 2.716%, so the effective rate is 1.118% to 17.086%. Employers with six or more staff also owe EMAC, and all contributing employers owe the 0.056% Workforce Training Fund contribution on the same wages.

Massachusetts income tax withholding is a flat 5%, but the 4% surtax applies to taxable income above $1,107,750 for tax year 2026. Circular M has employers withhold at 9% on wages above that threshold. The surtax has to be taken into account in computing required withholding, not left entirely to the employee’s return.

Frequency follows expected annual withholding: $100 or less is annual, 101 to $1,200 is quarterly, 1,201 to $25,000 is monthly, and more than $25,000 is quarterly with deposits due within three business days of the 7th, 15th, 22nd and last day of each month. Returns go through MassTaxConnect or Form M-941. Paper Forms W-2 with reconciliation Form M-3 are due February 28.

$15,000 per employee per calendar year. Once an employee reaches that in wages from you, no further unemployment tax is due on that employee for the rest of the year. The count restarts on 1 January and does not carry over from a previous employer.

$15.00 an hour. No local ordinance sets a higher rate. The tipped cash wage is $6.75.

April 30, July 31, October 31, January 31 (filings are due by 3 p.m.). A return is delinquent the day after the deadline even if the tax itself was paid on time, so file the return whether or not you can pay.

Verification

Sources & methodology

Methodology: every rate, threshold and due date on this page was taken from the administering agency’s own published material for the 2026 tax year, checked on Oct 1, 2026. Where a federal figure applies it comes from the IRS, SSA or US Department of Labor. 4 data points on this page could not be confirmed against a primary source and are either omitted or marked as not published, rather than estimated. Rates change, and some change mid-year, so confirm against your own rate notice before running a payroll.

Get started

Need help with Massachusetts payroll compliance?

CrownGlobe runs payroll for U.S. businesses in every state, registration, withholding, filings, and year-end forms.

Book a Free Payroll Consultation

Next step

Running payroll in more than one state?

Massachusetts alone means its own registration, its own deposit calendar and its own year-end reconciliation. Add a second state and the work compounds rather than doubles. CrownGlobe runs multistate payroll end to end: registration, deposits, quarterly returns and year-end.

Explore payroll processing services →
Browse all state payroll guides →
Book a free consultation →