Key figures
Massachusetts payroll
2026, with sources
Three agencies, three registrations
Massachusetts payroll runs through three agencies. DOR handles income tax withholding at the flat 5% rate, filed through MassTaxConnect. The Department of Unemployment Assistance collects unemployment contributions on the first $15,000 of each employee’s wages, 2.42% for an employer registered less than three years in 2026, plus the employer medical assistance contribution (EMAC), which is figured on the same first $15,000. The Department of Family and Medical Leave collects PFML contributions.
PFML is where size matters. In 2026 an employer with 25 or more covered individuals contributes 0.88% of eligible wages; it may withhold up to 40% of the medical leave share and all of the family leave share from employees, and pays the rest. Below 25, the employer share of the medical contribution isn’t required, so the effective rate is 0.46%. A 2026 law shifts employer contributions from medical leave to family leave from January 1, 2027. Under DFML’s guidance, 1099-NEC workers can count toward coverage, so a company with more contractors than employees should read it before registering.
Wages, sick time and paydays
The final pay rule is unforgiving: a startup that lets someone go on a Thursday owes the full final paycheck, including accrued vacation, that Thursday. Payroll providers can run an off-cycle check, but someone has to request it before the conversation, not after.
Earned sick time switches from unpaid to paid at 11 employees, counting everyone wherever they work, so a company growing from 8 to 12 people changes its leave policy along the way.
- Minimum wage: $15.00 an hour.
- Earned sick time: 1 hour per 30 worked, up to 40 hours a year; paid at 11+ employees, unpaid below.
- Paydays: hourly employees weekly or biweekly, generally within 6 days of the end of the pay period.
- Final pay: on the last day if fired or laid off; next regular payday if the employee quits.
The federal baseline
This page covers what Massachusetts adds. The federal rules underneath it apply here too.
Common questions
Do we pay into PFML with only five employees?
Yes. With fewer than 25 covered individuals you are not required to pay the employer share of the medical leave contribution, so the effective rate is 0.46% of eligible wages, which can be withheld from employees. At 25 or more the rate is 0.88%, and the employer pays at least 60% of the medical portion.
When is a fired employee’s final paycheck due?
On the day you let them go. Massachusetts requires full wages, including earned vacation, on the last day for an employee who is fired or laid off. An employee who quits is paid on the next regular payday.
Payroll next door
- CTConnecticut payrollConnecticut payroll means a $27,000 wage base, CT Paid Leave at 0.5% from the first employee, weekly paydays by default, and paid sick leave reaching every employer in 2027.
- NHNew Hampshire payrollNew Hampshire doesn’t tax wages, so payroll is unemployment insurance with NHES, the federal minimum wage, weekly or biweekly paydays and final pay within 72 hours of a discharge.
- NYNew York payrollNew York payroll is state and city at once: one NYS-45 for withholding and UI, a disability and Paid Family Leave policy you buy from a carrier, the MCTMT in the commuter district, and NYC’s own leave law.
- RIRhode Island payrollRhode Island payroll runs through the Division of Taxation and DLT: a $30,800 UI wage base at 1.21% for new employers, and TDI/TCI paid by employees at 1.1% of the first $100,000.
- VTVermont payrollVermont payroll is withholding plus a 0.44% Child Care Contribution, a $15,400 UI wage base at 1% for new employers, weekly paydays by default and final pay within 72 hours of a discharge.
How Massachusetts compares
- No tax on wagesStates with no state income tax on wagesMassachusetts: withholds state income tax. 9 of 51 states are on the list.
- Paid leave payrollStates with a paid leave or disability payroll programMassachusetts: state paid leave or disability program. 16 of 51 states are on the list.
- Local payroll taxStates with city, county or district payroll taxesMassachusetts: state-level only. 14 of 51 states are on the list.
Founder guides on this
- PeopleContractor or employee? Classification for startupsContractor or employee depends on control, not the contract. The IRS test, state rules, 1099s, payroll registration and the cost of getting it wrong.
- RunwayBurn rate and runway: how to calculate them correctlyGross burn, net burn and months of runway, done the way an investor checks them: from cash, averaged, and with the hires you’ve already committed to.
- EquityStock options, 409A valuations and vesting for startupsHow option strike prices are set by a 409A valuation, how vesting and the cliff work, and why ASC 718 makes every grant an expense on your P&L.
More of the Massachusetts guide
- AccountingAccounting and state tax in MassachusettsCorporate tax, conformity to federal rules, apportionment and what it does to your books
- ReceivablesReceivables and sales tax in MassachusettsSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in MassachusettsPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- ComplianceCompliance and filings in MassachusettsRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in MassachusettsCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.