Easily manage employment in Maryland

Payroll management in Maryland

Maryland has a diverse economy driven by industries such as biotechnology, healthcare, manufacturing, and government contracting. With state-specific payroll regulations, including a high minimum wage and paid leave requirements, employers in Maryland must ensure compliance with both state and federal laws. Understanding these payroll requirements is crucial for smooth payroll operations and compliance.

Payroll breakdown in Maryland

Employers in Maryland must adhere to both federal and state payroll regulations regarding wages, taxes, and benefits. Below is an overview of key payroll components:

Minimum wage and overtime

• Minimum wage: Maryland’s minimum wage is $15.00 per hour for businesses with 15 or more employees and $13.40 per hour for smaller businesses.
• Overtime rules:
• Maryland follows federal overtime laws, requiring employers to pay 1.5 times an employee’s regular rate for hours worked beyond 40 hours in a workweek.
• Some exemptions apply to specific industries and job classifications.

State income tax

• Maryland has a progressive state income tax system with rates ranging from 2% to 5.75% depending on income levels.
• Employers must also withhold local county taxes, which range from 2.25% to 3.2%.
• Employers must withhold state and local income tax and remit it to the Maryland Comptroller.

Unemployment insurance (UI) tax

• Employers must contribute to Maryland’s Unemployment Insurance (UI) program, managed by the Maryland Department of Labor.
• The wage base for UI tax in Maryland is $8,500.
• UI tax rates vary based on an employer’s experience rating and range from 1.0% to 10.5%.

Workers’ compensation

• Maryland law requires most employers to carry workers’ compensation insurance to cover medical expenses and lost wages for employees injured on the job.

Payroll tax filing and payment deadlines

• Employers must register for a Maryland Withholding Tax Account Number with the Maryland Comptroller.
• State withholding tax returns must be filed monthly, quarterly, or annually, depending on employer classification.
• UI tax reports must be submitted quarterly to the Maryland Department of Labor.
• Payroll tax payments can be made electronically through Maryland’s bFile system.

Quick facts: Important considerations for employers

• State minimum wage compliance: Maryland has a higher minimum wage than the federal rate, and employers must comply with state laws.
• Final paycheck rules:
• If an employee is terminated, employers must provide the final paycheck by the next scheduled payday.
• If an employee resigns, the final paycheck must be provided by the next scheduled payday.
• New hire reporting: Employers must report new hires to the Maryland New Hire Registry within 20 days.
• Paid leave: Maryland requires most employers to provide earned sick and safe leave, allowing employees to accrue one hour of paid leave for every 30 hours worked, up to 40 hours per year.
• Payroll recordkeeping: Employers must maintain payroll records for at least three years to comply with state and federal laws.
• Right-to-work state: Maryland is not a right-to-work state, meaning employees may be required to join a union if applicable.

Run payroll in Maryland with Remote

Managing payroll in Maryland requires careful attention to state-specific regulations, including minimum wage compliance, UI tax requirements, and workers’ compensation laws. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

To see just how easy global payroll can be, book a demo today.