Massachusetts Salary Paycheck Calculator
Processing payroll in Massachusetts doesn’t have to be complicated. With the knowledge you need to correctly calculate employees’ paychecks and payroll taxes, calculating payroll will be a cinch!
Here you will find answers to your most asked Massachusetts payroll questions. You will have the information to quickly process your Massachusetts payroll so you can get back to more important things… like running your business!
Massachusetts payroll taxes
Does Massachusetts have a personal income tax?
Answer: Yes. Everyone with Massachusetts personal income pays a flat rate of 5%.
Even though everyone pays the same tax rate, how do I know how much to withhold from my employees’ paychecks?
Answer: Figuring out how much tax to withhold isn’t as simple as taking five percent multiplied by gross wages. The withholding amount is also based on the number of exemptions an employee claims.
Your employees will tell you their exemptions using Form M-4. Using this form and withholding tax tables, you can calculate the correct amount using Circular M. Fortunately, payroll programs will make this calculation easy for you with just a few mouse clicks.
Form M-4 is optional, so if your employee doesn’t provide one, just withhold based on the federal Form W-4.
Do my employees need to complete a Form M-4 each year?
Answer: No. A new Form M-4 is only necessary when the number of exemptions changes due to a lifestyle change, such as when an employee gets married or a dependent moves out of the house. Such changes could affect the employee’s amount of tax.
Employees need to provide the new form to you within ten days if the number of exemptions previously claimed decreases.
When do I need to pay the Massachusetts withholding tax to the state?
Answer: Depending on how much tax you expect to withhold each year determines how often you need to pay. Payment frequencies are:
- Due by January 31 the following year.
- Due by April 30, July 31, October 31, or January 31.
- Due by the 15th of each month. However, the payments for March, June, September, and December are due by the last day of the following month.
Besides paying the tax, do I need to file any forms?
Answer: Yes. You’ll need to file payroll tax returns on either Form M-941 or through MassTaxConnect, depending on how much you withheld.
All employers must file federal Form W-2s with the Massachusetts Department of Revenue. Smaller businesses may file these forms on paper by mail and use Form M-3, Reconciliation of Massachusetts Income Taxes Withheld for Employers.
Be aware that you must still file a payroll tax return even if you have no tax due.
Does Massachusetts have an unemployment tax?
Answer: Yes. Employers pay Massachusetts unemployment tax on the first $15,000 of an employee’s wages each year. Base rates range from 0.94% to 14.37%, depending on your claims history.
Like with the withholding tax, you’ll need to file a quarterly report and pay the tax. Unemployment tax in Massachusetts is paid each quarter to the Department of Unemployment Assistance.
What is the salary threshold in Massachusetts?
Because Massachusetts doesn’t have a state minimum salary threshold, it adheres to the federal salary threshold, which is now $684 per week (equivalent to $35,568 per year for a full-year worker). The Department of Labor permits employers to count some bonuses, commissions, and other incentive payments toward meeting the standard salary level (up to 10%). Employees who earn at least $107,432 per year may qualify as “highly compensated.” See this Department of Labor fact sheet for details.
Am I required to obtain Workers’ Compensation insurance in Massachusetts?
Answer: Requirements to obtain Workers’ Compensation vary by state, this table outlines some of these requirements. If you determine that your company is required to purchase Workers’ Compensation insurance in your state, learn how to sign up for this insurance with Gusto. Sometimes, companies get a request for a workers’ comp audit—head to this article and click the workers’ comp audit reports dropdown for more information.
Are there other Massachusetts paycheck rules and laws I should know?
Answer: Below are some additional payroll rules to follow.
Report new and rehired employees and independent contractors through MassTaxConnect within 14 days of employment.
Salaried employees must be weekly, biweekly, or semimonthly. An employee may elect to be paid monthly.
Give final wages no later than the next regular payday. If they quit and there is no regular payday, you have until the first Saturday. If a worker leaves involuntarily, you must pay them in full on their last day of work.
You must provide a pay stub to every employee that includes:
- Name of the employer and employee
- Hours worked
- Payment date
- Deductions or increases made during the pay period
Federal payroll taxes
Please explain FICA tax.
Answer: Federal Insurance Contribution Act (FICA) is made up of the Medicare tax and the Social Security tax. In 2022, the Social Security tax requires employers and employees to each contribute 6.2% of wages up to $147,000. And the Medicare tax requires each to contribute 1.45% of all wages. See the IRS webpage for details, like maximum thresholds.
|Social Security tax||12.4% (split equally) on the first $147,000 of each employee’s wages in 2022|
|Medicare tax||2.9% (split equally) on all of an employee’s wages each year|
What do I do for federal income tax for my employees?
Answer: Unless an employee is exempt from federal income tax, you’ll know whether they are exempt when they complete Form W-4.
Form W-4 should be completed by an employee by their first day of employment. The information on this form will determine how much tax you’ll withhold. Tax filing status and the number of dependents affect how much is withheld.
Keep the W-4 forms with your payroll records—no need to send them to the IRS.
Are there other federal payroll taxes I need to pay?
Answer: You’ll need to pay federal unemployment tax, and some of your employees may need to pay the Additional Medicare tax.
Federal unemployment tax
Like the state, the federal government also has an unemployment tax. It’s called FUTA and it’s an annual tax employers pay on the first $7,000 of each employee’s wages. The FUTA rate for 2022 is 6%, but most employers only have to pay 0.6% each year.
Additional Medicare tax
Some of your employees may need to pay the Additional Medicare tax. If you have any employees earning more than $200,000 per year, you’ll need to withhold 0.9% on the excess.
How do I pay federal taxes?
Answer: The IRS requires you to pay federal payroll taxes annually, quarterly, monthly, or semi-weekly depending on the amount of tax owed. Warning: If you accumulate taxes of more than $100,000 in a day, you are required to deposit the taxes with the IRS by the next business day.
FICA, federal income tax, and Additional Medicare tax are paid most frequently, either monthly or semi-weekly. However, each quarter you will have to provide a summary on Form 941.
Federal unemployment tax is generally paid annually using Form 940. But for employers with a tax of more than $500, quarterly payments are required.
Hopefully you’re feeling confident about processing your Massachusetts payroll. If you need help, check out Gusto’s payroll services!