Maryland’s state unemployment tax for employers is paid entirely by the business, never withheld from employee wages, and it applies only to the first $8,500 each worker earns in a calendar year. Rates run from 0.30% to 7.50% for experience-rated employers, with new businesses starting between 1.0% and 2.6%. For 2026, Maryland is using Table A, the lowest of its six rate tables.1Maryland Department of Labor. Tax Rates and Quarterly Reporting Deducting any part of the tax from a worker’s paycheck is prohibited under Maryland law.2Maryland Department of Labor. The Maryland Guide to Wage Payment and Employment Standards – Deductions for Unemployment and Workers Compensation
Who Has to Pay
Most Maryland businesses owe unemployment contributions once they cross either of two thresholds: paying $1,500 or more in total wages during any calendar quarter, or employing at least one person for any part of a day in 20 different weeks in a calendar year. Either trigger is enough, and both are low enough that nearly every business with regular payroll is covered.
Two categories follow separate rules. Agricultural employers become liable after paying $20,000 or more in cash wages in a single quarter, or employing ten or more workers during 20 different weeks in a year. Employers of household workers, like nannies or housekeepers, become liable once cash wages hit $1,000 in any calendar quarter.
Registering Your Business
New employers register directly through BEACON, Maryland’s online unemployment insurance portal. You do not need an existing account number to begin. Select “Register for an Account” and work through the prompts.3Maryland Department of Labor. Instructions for Using the Maryland Unemployment Insurance Portal (BEACON)
Have this information ready:
- Your Federal Employer Identification Number (FEIN)
- The legal name of your business, plus any trade or “doing business as” names
- The physical address where work is performed in Maryland
- The date you first paid (or will first pay) wages for services in Maryland
- Your business entity type and date of formation
- Owner and officer information
- A mailing address for benefit charge statements
Nonprofits registering under a 501(c)(3) exemption should also have their IRS exemption letter on hand.3Maryland Department of Labor. Instructions for Using the Maryland Unemployment Insurance Portal (BEACON) You may separately need the Comptroller’s Combined Registration Application for other state tax accounts, but that form does not establish your unemployment insurance account.4Maryland Department of Labor. New Employers – Division of Unemployment Insurance
How Your Rate Is Set
The tax hits only the first $8,500 of each employee’s calendar-year wages. Once a worker crosses that mark, you stop owing the tax on any additional earnings from that worker for the rest of the year.1Maryland Department of Labor. Tax Rates and Quarterly Reporting That ceiling lets you cap your annual per-employee cost with precision.
New employers pay between 1.0% and 2.6% until they’ve operated long enough to earn an experience rating. After that, your rate depends on your benefit ratio, which the state calculates by dividing the benefits charged against your account over the preceding three rating years by your taxable wages over the same period. Fewer claims relative to payroll means a lower rate.5Maryland General Assembly. Maryland Code Labor and Employment 8-612
Your actual rate also depends on which of six tables (A through F) is active. Table A carries the lowest rates, Table F the highest. Maryland selects the table each year based on the balance in the state’s Unemployment Insurance Trust Fund relative to total taxable wages as of September 30 of the prior year. A healthy fund produces a lower table. For 2026, Table A is in effect.1Maryland Department of Labor. Tax Rates and Quarterly Reporting Managing turnover and contesting improper claims has a direct effect on what you pay year to year.
Quarterly Filing and Payment
You file the Quarterly Contribution and Wage Report through BEACON, listing total wages and taxable wages for every employee who worked during the quarter. Payments go through ACH debit or ACH credit.
The schedule is fixed:
- First quarter (January–March): due April 30
- Second quarter (April–June): due July 31
- Third quarter (July–September): due October 31
- Fourth quarter (October–December): due January 31
When a deadline lands on a Saturday or Sunday, you have until the next business day.6Maryland Department of Labor. Payment Plans for Employers
What Late Filing Costs
Missing a deadline triggers a flat $35 penalty per late report, plus interest at 1.5% per month on the unpaid contribution balance.1Maryland Department of Labor. Tax Rates and Quarterly Reporting Interest accrues on partial months as well, so even a few days late generates a charge. If you expect trouble paying on time, request a payment plan through BEACON before the due date passes.6Maryland Department of Labor. Payment Plans for Employers
Buying a Business: Successor Rules
Acquiring another employer’s assets, operations, or workforce can mean inheriting that employer’s unemployment tax history. Maryland treats you as a “successor employer,” and what happens next depends on whether common ownership, management, or control links you to the seller.
If common ownership exists, the predecessor’s experience rating transfers to you. Common ownership means the same person is a sole proprietor, partner, LLC member, corporate officer, or majority shareholder in both businesses. Spouses, children, and parents of a sole proprietor count too.4Maryland Department of Labor. New Employers – Division of Unemployment Insurance
With no common ownership, the outcome depends on whether you already had an account. A brand-new business gets the standard new employer rate, and no experience transfers. An existing business that acquires another keeps its current rate through December 31 of the acquisition year, then receives a blended rate the following year that folds in the predecessor’s experience.
There’s a safe harbor. You are not a successor if you have no common ownership with the seller and you acquire less than 50% of both the seller’s payroll or employees and the seller’s assets or operations.4Maryland Department of Labor. New Employers – Division of Unemployment Insurance
Nonprofits Can Choose Reimbursement
Registered 501(c)(3) nonprofits have an option for-profit employers don’t. Instead of paying quarterly contributions based on a tax rate, a nonprofit can elect to reimburse the state dollar-for-dollar for unemployment benefits actually paid to its former employees.7Comptroller of Maryland. NonProfit
The reimbursement method can save money for organizations with low turnover because you only pay when a former employee successfully claims benefits. The tradeoff is unpredictability: a single sizable layoff can produce a reimbursement bill much larger than what the contribution method would have cost. Nonprofits with stable workforces tend to come out ahead. You make the election on the Comptroller’s Combined Registration Application.
Employees Only: Watch Your Classification
This tax applies to employees, not independent contractors, so classification matters. Maryland uses a three-part test under the Workplace Fraud Act. To treat a worker as an independent contractor, you have to prove all three:
- The worker is free from your control over how the work is performed, not just what the result should be.
- The work falls outside your usual course of business. A marketing firm hiring a freelance copywriter, for example, struggles here because writing is core to the business.
- The worker operates an independently established trade or business of the same nature as the services performed.
Fail any prong and the worker is legally an employee. Misclassifying an employee as a 1099 contractor means you haven’t been paying unemployment insurance on those wages. If the state finds out through an audit or when the worker files a claim, you’ll owe back contributions plus interest and penalties, and the same misclassification can pull in unpaid workers’ compensation premiums, overtime violations, and retroactive benefits. Workers denied unemployment because they were misclassified have every reason to report the situation.
How This Ties to Federal FUTA
Every employer that owes Maryland unemployment tax also owes federal unemployment tax under FUTA. The federal rate is 6.0% on the first $7,000 of each employee’s wages, but employers who pay their state unemployment tax in full and on time receive a credit of up to 5.4%, dropping the effective federal rate to 0.6%.8Internal Revenue Service. Topic No. 759, Form 940, Employers Annual Federal Unemployment Tax (FUTA) Tax Return
The credit shrinks if your state has borrowed from the federal government to pay claims and hasn’t repaid within two years. Maryland is not a credit reduction state for 2026, so Maryland employers get the full 5.4% credit and cap out at about $42 per employee per year federally (0.6% of $7,000). Falling behind on your Maryland contributions can jeopardize that credit, which is a second reason paying the state on time pays off.