Maine payroll taxes come in five pieces: state income tax withheld from employee wages at graduated rates up to 7.15%, state unemployment insurance paid by the employer on the first $12,000 of each worker’s wages, Paid Family and Medical Leave premiums of up to 1% of wages, plus federal Social Security, Medicare, and FUTA. Some are withheld from the employee, some come out of your pocket, and a few are split. Here’s what each one costs and how it works.
Maine Income Tax Withholding
Maine withholds state income tax using three graduated brackets. For 2026, the rates are 5.8%, 6.75%, and 7.15%, and the thresholds depend on the employee’s filing status.1Maine Revenue Services. Withholding Tables for Individual Income Tax 2026
For a single filer:
- Up to $27,400: 5.8% of taxable income
- $27,400 to $64,850: $1,589 plus 6.75% of the amount over $27,400
- $64,850 and above: $4,117 plus 7.15% of the amount over $64,850
Married employees filing jointly get wider brackets. The 5.8% rate runs to $54,850, the 6.75% rate covers income up to $129,750, and 7.15% applies above that.1Maine Revenue Services. Withholding Tables for Individual Income Tax 2026
Which schedule you apply, and how you adjust for allowances and the standard deduction, comes from each employee’s Form W-4ME. That form is separate from the federal W-4, and both should be submitted on the same date.2Maine Code of Maine Rules. 18-125 CMR ch 803 08 – Form W-4ME
Bonuses, commissions, and other supplemental wages paid separately from regular wages get a flat 5% state withholding rate.1Maine Revenue Services. Withholding Tables for Individual Income Tax 2026 The federal supplemental rate is 22% on amounts up to $1 million and 37% above that.3Internal Revenue Service. Publication 15, Employers Tax Guide
Maine Unemployment Insurance
Unemployment insurance in Maine is paid entirely by the employer. For 2026, contributions are calculated on the first $12,000 of each employee’s annual wages, and the state is operating under Schedule A, its lowest tax schedule. The average annual tax comes out to about $267.60 per employee earning at least $12,000.4Maine Department of Labor. 2026 Employer Unemployment Tax Schedule to Remain at Lowest
New employers get an assigned rate. Once your business has enough claims history, the Department of Labor moves you to an experience-based rate. Employers with few claims pay less; those with frequent layoffs pay more, and the range for experienced employers can run from 0% to over 6% depending on the schedule in effect. Wage reports go to the Department of Labor quarterly.5Maine Department of Labor. Unemployment Employer Services If an audit finds underreported wages, the state can adjust your rate and assess back contributions.
Paid Family and Medical Leave Premiums
Maine’s Paid Family and Medical Leave program began collecting contributions on January 1, 2025. Benefits become available for leave taken on or after May 1, 2026, with eligible workers entitled to up to 12 weeks per benefit year.6Maine Department of Labor. Maine Paid Family and Medical Leave
The combined premium is capped at 1% of each employee’s wages. How the cost splits depends on headcount:7Maine State Legislature. Maine Code Title 26 Section 850-F – Premiums
- 15 or more employees: you withhold up to 0.5% from the employee and pay 0.5% yourself, remitting the full 1%.
- Fewer than 15 employees: you withhold up to 0.5% from the employee and remit that amount. You owe no employer share.
Contributions are filed quarterly through the Paid Leave Contributions Portal.
Opting Out With a Private Plan
If you already offer leave through a private insurer, you can apply for a private plan exemption. The plan must provide benefits at least equal to the state program, cover the same leave reasons, allow at least 10 weeks of aggregate leave per benefit year, and cost employees no more than the state plan would.8Maine Department of Labor. Guide for Substantially Equivalent Private Plan Substitution Short-term disability policies and accrued PTO don’t qualify on their own. The application runs through the Maine Paid Leave Contributions Portal and carries a $250 fee. Even with an approved exemption, quarterly wage reports still go to the Department of Labor.
Federal Payroll Taxes You Still Owe
State obligations sit on top of the federal payroll taxes every employer pays.
Social Security and Medicare (FICA)
You and your employee each pay 6.2% of wages toward Social Security, up to a wage base of $184,500 for 2026.9Social Security Administration. Contribution and Benefit Base Once an employee crosses that cap, Social Security withholding stops for the year. Medicare is 1.45% on both sides with no wage cap. Employees earning more than $200,000 (single) or $250,000 (married filing jointly) owe an additional 0.9% Medicare tax on the excess, with no employer match on that piece.
Federal Unemployment (FUTA)
FUTA is 6.0% on the first $7,000 of each employee’s annual wages, paid entirely by the employer with no withholding from the worker.10Internal Revenue Service. Topic No 759 Form 940 Employers Annual Federal Unemployment Tax Return Employers who pay their state unemployment taxes on time and in full get a credit of up to 5.4%, which drops the effective FUTA rate to 0.6%, or a maximum of $42 per employee per year.
How and When You File
State withholding filings and payments run through the Maine Tax Portal.11Maine Revenue Services. Maine Tax Portal FAQs Deposit frequency depends on your lookback amount. If you reported $18,000 or more in Maine income tax withholding during the 12 months ending June 30 of the prior year, you file and pay on a semiweekly schedule. Below $18,000, you pay quarterly.12Maine Revenue Services. Income Tax Withholding FAQ
Unemployment insurance wage reports go to the Department of Labor quarterly. PFML contributions also file quarterly, through the separate Paid Leave Contributions Portal. Federal FICA deposits are due monthly or semiweekly depending on your total tax liability, and FUTA is generally paid quarterly.
Setting Up Your Payroll Tax Accounts
Before running a first payroll, you need three registrations. Get a Federal Employer Identification Number from the IRS.13Internal Revenue Service. Employer Identification Number Register for a Maine Tax ID through the Maine Tax Portal for withholding filings.11Maine Revenue Services. Maine Tax Portal FAQs And set up an unemployment insurance account with the Maine Department of Labor to report wages and pay UI contributions.5Maine Department of Labor. Unemployment Employer Services
Each new hire fills out Form W-4ME so you know how much state income tax to withhold.14Maine Revenue Services. Maine W-4ME Employees Withholding Allowance Certificate Maine also requires you to report every new hire to the Department of Health and Human Services within seven days of the hire date; this supports child support enforcement and other state programs.15Maine Department of Labor. Reporting New Hires
Employees Versus Independent Contractors
Payroll tax obligations apply only to employees, so misclassifying workers as contractors can unravel everything above at once. Maine uses its own multi-factor test, and a worker is presumed to be an employee unless you can show they meet all five criteria in the first group and at least three of seven in the second.16Maine Department of Labor. Employment Standard Defining Employee vs Independent Contractor
The five mandatory factors require that the worker controls how the work gets done, operates an independently established business, has the opportunity for profit or loss, hires and supervises their own assistants, and makes their services available to other clients. The additional criteria include factors like substantial investment in their own tools and facilities, not working exclusively for you, and being paid by the job rather than by the hour.
Intentional misclassification in Maine carries penalties of up to $10,000.16Maine Department of Labor. Employment Standard Defining Employee vs Independent Contractor Beyond that, it means you’ve skipped withholding, unemployment contributions, and PFML premiums, which creates compounding liability across multiple agencies at once. Auditors who find one misclassified worker usually look at the rest.
Penalties for Late Payment or Filing
Late-paid Maine withholding tax carries a penalty of 1% of the unpaid tax for each month or partial month the payment is late, up to a maximum of 25%.17Maine State Legislature. Maine Code Title 36 Section 187-B – Penalties Late-filed returns get a penalty of $25 or 10% of the tax due, whichever is greater. If you still haven’t filed 60 days after a formal demand notice from Maine Revenue Services, that jumps to $25 or 25% of the tax due.18Maine Revenue Services. Your Rights as a Taxpayer
Interest also accrues on any unpaid balance and continues building even during an appeal.18Maine Revenue Services. Your Rights as a Taxpayer Filing on time, even without full payment, at least avoids the late-filing penalty and leaves room to work out a payment arrangement with the state.