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Comprehensive Guide to Massachusetts Payroll Taxes (2025): Rates, Compliance & Filing

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Deel Team

Last Update

July 16, 2025

Table of Contents

General overview

Massachusetts State Income Tax (SIT)

Massachusetts State Disability Insurance (SDI)

Paid Family and Medical Leave (PFML) in Massachusetts

Massachusetts Paid Sick Leave (PSL) Tax

Employer Contributions to the Department of Unemployment Assistance

Workers’ compensation

Massachusetts Reciprocal Agreements

Simplify US payroll tax compliance with Deel

Key takeaways
  1. Massachusetts employers must manage both federal (income tax, FICA, FUTA) and state payroll obligations, each with its own rates, wage bases, and strict filing deadlines.

  2. Compliance requires electronic registration and timely remittance through portals like MassTaxConnect and UI Online, adhering to thresholds that dictate annual, quarterly, monthly, or quarter‑monthly filings to avoid severe penalties.

  3. Deel streamlines US and international payroll by automating tax withholdings, contributions, filings, and regulatory updates, helping companies stay fully compliant with minimal effort.

Payroll in Massachusetts requires managing PFML, SUI, EMAC, workers’ compensation, and a range of other state‑specific contributions, each governed by distinct rates, taxable wage bases, and filing deadlines.

Deel has supported thousands of US and global clients by automating state income tax withholding, PFML remittance, unemployment insurance contributions, and workforce training fund payments.

This guide details Massachusetts payroll tax basics, plus how to use Deel’s US payroll solution to ensure compliance, reduce manual errors, and optimize payroll operations.

General overview

Federal obligations

Employers must withhold and remit the following federal taxes:

  • Federal Income Tax
  • FICA Taxes (Social Security and Medicare)
  • FUTA (Federal Unemployment Tax)

State obligations

Employers are also responsible for various state-specific contributions, including:

  • State Income Tax (SIT)
  • Paid Family and Medical Leave (PFML)
  • State Unemployment Insurance (SUI)
  • COVID-19 Recovery Assessment
  • Employer Medical Assistance Contribution (EMAC)
  • Workforce Training Fund Program (WTFP)
  • Workers' Compensation Insurance

Local income tax

Massachusetts currently does not have any local income tax obligations.

See also: How Do State Payroll Taxes Vary in the US? (2025 Guide)

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Massachusetts State Income Tax (SIT)

Massachusetts employers are responsible for withholding State Income Tax (SIT) from their employees' wages.

Description Details
Standard Rate (2025) 5.00%
Surcharge 4% on income over $1,053,750 annually
Filing and Payment Platform MassTaxConnect

Employers must register electronically and remit State Income Tax to the Department of Revenue (DOR) from their employees through the MassTaxConnect system, Massachusetts' official online portal.

Filing deadlines

Employers must adhere to the following deadlines based on their withholding amounts:

Filing Frequency Annual Withholding Amount Deadline
Annual $100 or less January 31 (following calendar year)
Quarterly $101–$1,200 Last day of month following each quarter
Monthly $1,201–$25,000 15th of the following month (exceptions apply: March, June, September, December - last day of month)
Quarter-Monthly Over $25,000 Within 3 business days after quarter-monthly period end if cumulative taxes reach $500 or more; remaining by last day of month following quarter

Required tax forms

Employers must file one of the following forms annually by April 15 or the next business day:

  • Form 1: Resident Income Tax Return
  • Form 1-NR/PY: Nonresident/Part-Year Resident Tax Return

More information about filing and paying withheld tax is available on the Massachusetts DOR website.

See also: 24 Business Tax Forms Every US Employer Should Know

Massachusetts State Disability Insurance (SDI)

Unlike California and several other states, Massachusetts doesn’t levy a standard State Disability Insurance (SDI) tax. In those states, SDI contributions fund wage‑replacement benefits for employees who are temporarily unable to work due to non–non-work-related illness or injury.

Instead, Massachusetts offers a Paid Family and Medical Leave program, which provides similar benefits to SDI but is funded differently.

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As a Massachusetts employer, you're responsible for withholding Paid Family and Medical Leave (PFML) tax from your employees' paychecks each quarter.

Workforce Size Contribution Rate (2025) Employer Obligation
Under 25 covered employees 0.46% of eligible wages Withhold and remit
25 or more covered employees 0.88% of eligible wages total Withhold, remit, plus employer contribution (mandatory 0.42% medical leave)

If you provide a private or self-insured plan with equal or superior employee benefits to PFML, you may be eligible for an exemption from associated PFML contributions.

In 2025, the maximum weekly benefits under PFML are increasing from $1,149.90 to $1,170.64. For more details, refer to the DFML website.

In Massachusetts, employers with 11 or more employees must allow workers to accrue paid sick leave at a rate of one hour for every 30 hours worked, up to a maximum of 40 hours per year; there is no provision for unpaid sick leave under this law.

See more: An Employer's State-by-State Guide to Paid Sick Leave in the US

Employer Contributions to the Department of Unemployment Assistance

Employers in Massachusetts are required to make the following contributions to the Department of Unemployment Assistance:

  • State Unemployment Insurance (SUI)
  • COVID-19 Recovery Assessment
  • Employer Medical Assistance Contribution (EMAC)
  • Workforce Training Fund (WTFP)

Every quarter, employers governed by Massachusetts unemployment law need to remit their contributions to the Department of Unemployment Assistance (DUA). After you submit your quarterly employment and wage detail report, UI Online will determine the amount due. The deadline for payments is 30 days after quarter end.

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State Unemployment Insurance (SUI)

State Unemployment Insurance (SUI) is an employer-funded program that provides temporary financial support for individuals who are unemployed through no fault of their own.

As a private employer in Massachusetts, you're required to pay SUI if you have one or more employees working for 1 or more days for 13 weeks within a calendar year, or if you pay wages exceeding $1,500 in any calendar quarter. Exemptions apply.

Massachusetts SUI rates for 2025 are:

Employer Type SUI Rate Range 2025 Taxable Wage Base
Positive-balance employers 0.83% – 4.61% $15,000
Negative-balance employers 6.19% – 12.65% $15,000
New Non-construction Employers 2.13% $15,000
New Construction Employers 5.45% $15,000

For the latest information, always refer to the official Massachusetts Department of Unemployment Assistance website.

You can manage your Massachusetts unemployment insurance through the state's online portal, which offers a convenient platform for handling UI payments and related matters.

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COVID-19 Recovery Assessment

Private-contributory, experience-rated employers in Massachusetts must contribute to the COVID-19 Recovery Assessment to begin to recover the charges to the COVID-19 Employer Relief Account.

Employers with new SUI rates are exempt, along with reimbursable and governmental employers, employers with assigned SUI rates that received zero 3-year average wages on their rate notice, and non-profit employers who have changed their payment method to contributory within the last 3 years.

Contributions due are automatically calculated for subject employers when quarterly employment and wage detail reports are filed, based on a taxable wage base of $15,000 per employee. There is no additional filing requirement.

Applicable Employers Calculation Basis Exemptions
Private-contributory, experience-rated employers $15,000 taxable wage base per employee New employers, reimbursable, governmental employers, certain non-profits

Employer Medical Assistance Contribution (EMAC)

Employers are required to file a quarterly EMAC contribution report with the Department of Unemployment Assistance (DUA) through UI Online. If this isn't submitted, the liability amount is estimated.

Established employers in Massachusetts with 6 or more employees are required to pay an Employer Medical Assistance Contribution (EMAC).

Employee Threshold Annual Taxable Wage Base Contribution Rate by Year
6+ Employees $15,000 0.12% (Year 4), 0.24% (Year 5), 0.34% (Year 6+)

Workforce Training Fund Program (WTFP)

The Workforce Training Fund Program (WTFP) supports professional development in Massachusetts. All of the state's employers contribute at a flat rate of 0.056% in 2024. See the update for 2025 on the official government website.

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Workers’ compensation

Workers' compensation provides vital financial support in the event of job-related injuries or illnesses. It also provides legal protection for employees and employers. All employers in Massachusetts are required to carry workers' compensation insurance, regardless of the number of hours worked or the number of employees. This includes you as the employer if you are considered an employee of your own company. Exemptions apply.

Employers must purchase workers' compensation Insurance from one of the state's qualified commercial carriers. You may not self-certify.

Penalties for non-compliance are severe.

Penalty Details
Stop-work order (SWO) Issued by DIA until compliance
Daily fine (SWO unappealed) $100/day (including weekends, holidays) until compliance
Daily fine (SWO appealed) $250/day (business may operate during appeal)
Criminal charges Up to 1 year prison and/or fine up to $1,500 upon conviction
Debarment from public contracts 3-year period of debarment

Massachusetts Reciprocal Agreements

Reciprocal income‐tax agreements let people who live in one state but work in another remit state taxes only to their home state, eliminating dual withholding and simplifying payroll for both employees and employers.

Massachusetts, however, has no such reciprocity pacts with any other state, so whether you reside here and work elsewhere or vice versa, you won’t qualify for a reciprocal exemption. That said, the federal system bars two states from taxing the same earnings, and your state of residence will typically grant you a credit for any income taxes you pay to the other state.

Simplify US payroll tax compliance with Deel

While this guide provides essential information on Massachusetts payroll taxes, payroll compliance, and state requirements extend beyond what is covered above. To streamline the process and ensure full compliance, companies can turn to Deel.

Deel offers a comprehensive solution for managing US and international payroll, including payments, taxes, worker classification, and more.

Speak with an expert today to see how you can streamline your US payroll processes and ensure compliance with state regulations.

Disclaimer: This article is provided for general informational purposes and should not be treated as legal or tax advice. Consult a professional before proceeding.

FAQs

Long-term gains from the sale or exchange of collectibles are taxed at 12.00% (subject to a 50% deduction).

Massachusetts uses “SUTA” (State Unemployment Tax Act) and “SUI” (State Unemployment Insurance) interchangeably to describe the payroll tax employers pay into the state unemployment fund. Depending on an employer’s experience rating and classification, the rate can fall anywhere between 0.83% and 12.65%.

Eligible workers receive about half of their average weekly earnings through the Massachusetts unemployment insurance program. Beginning October 1, 2024, the highest weekly benefit amount is capped at $1,051.

Under the Federal Unemployment Tax Act, employers owe 6.0% on the first $7,000 of each employee’s wages. If you pay your state unemployment taxes (SUTA) fully and on time, you qualify for a federal credit of up to 5.4%, which typically brings your net FUTA liability down to 0.6%.

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