How Much Is Payroll Tax in Massachusetts: Withholding, SUI, PFML

Massachusetts payroll tax rates for 2026 combine federal obligations with several state-specific charges. Employers withhold 6.2% Social Security and 1.45% Medicare from wages and match both, pay a state income tax withholding of 5% (with a 4% surtax on annualized wages above $1,107,750), owe state unemployment insurance between 0.94% and 14.37% on the first $15,000 of each employee’s wages, contribute up to 0.34% for the Employer Medical Assistance Contribution, and pay into Paid Family and Medical Leave at 0.88% of eligible wages (0.46% for employers with fewer than 25 covered individuals).

Federal Rates Every Massachusetts Employer Owes

Federal payroll taxes usually make up the largest slice of the bill. Social Security is 6.2% on both sides of the paycheck, applied to wages up to $184,500 in 2026.¹ Once an employee crosses that wage cap, no further Social Security tax is collected that year. Medicare is 1.45% each for employer and employee, with no cap.

Employers also withhold an Additional Medicare Tax of 0.9% on employee wages above $200,000 in a calendar year. There is no employer match on the extra amount, and withholding starts automatically in the pay period the employee crosses the threshold.²

Federal unemployment (FUTA) is nominally 6.0% on the first $7,000 of each employee’s wages. Employers who pay their Massachusetts state unemployment on time receive a 5.4% credit, dropping the effective rate to 0.6%, or about $42 per employee per year.³ If the state ever borrows from the federal unemployment trust fund and doesn’t repay, the credit can shrink and the effective rate rises.⁴

Massachusetts Income Tax Withholding at 5%

Massachusetts uses a flat 5.0% income tax on wages. Employers must deduct it from every paycheck and remit it to the Department of Revenue.⁵ The exact amount from each paycheck depends on what the employee claims on Form M-4, the Massachusetts Employee’s Withholding Exemption Certificate.⁶

The 4% Surtax on High Earners

Since 2023, Massachusetts has applied an extra 4% surtax on annual income above $1 million, sometimes called the Fair Share Amendment or millionaire’s tax. For 2026 withholding, the inflation-adjusted threshold is $1,107,750 in annualized wages. Below that, employers withhold at 5%. Above it, the rate jumps to 9% on the excess.⁷ The 2026 Circular M withholding tables already incorporate the surtax, so payroll systems using those tables should pick it up automatically.

State Unemployment Insurance Rates for 2026

Massachusetts unemployment insurance is an employer-only tax on the first $15,000 of each employee’s annual wages. Your rate depends on your experience rating, essentially a scorecard of unemployment claims filed against your account over time.⁸

For 2026, Massachusetts is operating under Rate Schedule E. Experienced employers with a strong track record can pay as little as 0.94%, while those with heavy claim histories can pay up to 14.37%. Midrange employers, with a positive reserve around 7% to 8%, fall roughly in the 3.1% to 3.4% band.

New employers who haven’t built three years of claim history receive an assigned rate from the Department of Unemployment Assistance rather than an experience-based rate. Once you have at least three years of history, your rate is recalculated annually. Voluntary contributions can improve your reserve percentage and lower next year’s rate.⁸

Employer Medical Assistance Contribution

EMAC funds subsidized health care programs and applies to the same $15,000 wage base as unemployment insurance. The rate phases in based on how long you’ve been a registered employer:⁹

Years 1 through 3: exempt
Year 4: 0.12%
Year 5: 0.24%
Year 6 and beyond: 0.34%

Employers with five or fewer employees in a given quarter are exempt from EMAC entirely. At the full 0.34% rate on a $15,000 wage base, EMAC tops out at $51 per employee per year. Small on its own, but it stacks up across a larger workforce and rides on the same quarterly filing as unemployment insurance.

Paid Family and Medical Leave Contributions

PFML is funded by a mandatory 0.88% of eligible wages for employers with 25 or more covered individuals. The 0.88% splits into two pieces, each with its own rule about who pays:¹⁰

Family leave, 0.18% of eligible wages: up to 100% can be withheld from the employee.
Medical leave, 0.70% of eligible wages: up to 40% (0.28%) can be withheld from the employee; the employer must pay at least the remaining 60% (0.42%).

On $80,000 of eligible wages, the total contribution is $704: at least $336 from the employer and up to $368 from the employee through payroll deductions.

Employers with fewer than 25 covered individuals owe a lower rate of 0.46% of eligible wages, and the entire amount can be withheld from employees. Small employers have no required direct contribution, though they can voluntarily cover part or all of the employee’s share. Eligible wages are capped at the Social Security taxable maximum, which is $184,500 for 2026.¹⁰¹

When You Have to Deposit and File

How often state income tax withholdings go to the Department of Revenue depends on your annual collection amount:¹¹

$100 or less per year: file and pay annually by January 31.
$101 to $1,200: file and pay quarterly.
$1,201 to $25,000: file and pay monthly, due by the 15th of the following month (March, June, September, and December payments are due by the end of the following month).
More than $25,000: file quarterly returns, but deposit within three business days whenever withholdings reach $500 or more at the 7th, 15th, 22nd, or last day of any month.

All filings run through MassTaxConnect, which also handles unemployment insurance and EMAC reporting.¹²

Penalties for Late Filing or Payment

The Department of Revenue charges 1% per month for late filing and 1% per month for late payment, each capped at 25% of the amount owed. They stack: an employer who files late and pays late can face up to 50% in combined penalties on the same balance.¹³

Interest runs on top of penalties at the federal short-term rate plus four percentage points, compounded daily. Interest cannot be waived. The DOR also charges $30 per demand notice for missed payments and up to $100 for each failure to file or pay electronically when required.¹³ Penalty abatement is possible for reasonable cause, but interest keeps running.

Rates Only Apply to Employees

Every rate above assumes the worker is an employee. Massachusetts uses one of the strictest classification tests in the country. Under M.G.L. c. 149, § 148B, any person performing services is presumed to be an employee unless all three of these are true: the worker is free from the employer’s control over how the work is done, performs services outside the employer’s usual business, and is independently established in the same trade.¹⁴ Failing any prong makes the worker an employee for payroll tax purposes, and you owe withholding, unemployment insurance, EMAC, and PFML on their wages. Misclassification triggers back taxes, penalties, and potential wage theft liability, so if you have contractors on the books it’s worth confirming they clear all three prongs before assuming the rates above don’t apply to them.

1
Social Security Administration. Contribution and Benefit Base
2
Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
3
Internal Revenue Service. Topic No. 759, Form 940 – Employers Annual Federal Unemployment (FUTA) Tax Return
4
Internal Revenue Service. FUTA Credit Reduction
5
General Court of Massachusetts. Massachusetts General Laws Chapter 62B – Withholding of Taxes on Wages and Declaration of Estimated Income Tax
6
Massachusetts Department of Revenue. Form M-4 – Massachusetts Employees Withholding Exemption Certificate
7
Mass.gov. Massachusetts Circular M – Income Tax Withholding Tables at 5.0% Effective January 1, 2026
8
Mass.gov. Employer Contributions to Unemployment
9
Mass.gov. Employer Medical Assistance Contribution (EMAC)
10
Mass.gov. Paid Family and Medical Leave Employer Contribution Rates and Calculator
11
Mass.gov. Withholding Taxes on Wages
12
Mass.gov. Filing Returns in MassTaxConnect
13
Mass.gov. Massachusetts Penalties and Interest Assessed by DOR
14
General Court of Massachusetts. Massachusetts General Laws Chapter 149 Section 148B