How to Do Payroll in Massachusetts: A Step-by-Step Guide

Last reviewed: July 2026

Massachusetts payroll is not especially exotic compared to other states, but it does have a few local quirks: a strict 14-day new-hire reporting window, pay-frequency rules that differ for hourly and salaried staff, and a state withholding form (M-4) that has to sit alongside the federal W-4. Miss one of those and you're looking at back taxes or a Department of Labor Standards complaint, not just an awkward phone call.

1. Get Your Federal EIN

Every payroll process starts with a federal Employer Identification Number. Apply free at IRS.gov and you'll have the number in about fifteen minutes, well before your first hire's start date. You'll need it for every state registration that follows, plus your business bank account and any payroll software you choose later.

2. Register with the Massachusetts Department of Revenue

Once the EIN is in hand, register for a withholding account with the Massachusetts Department of Revenue (DOR) through MassTaxConnect. This account is what lets you withhold state income tax from paychecks and remit it on schedule.

Massachusetts uses a flat income tax rate with a surtax on very high earners, and how often you deposit depends on how much you withhold annually. Employers with larger payrolls deposit weekly or quarterly; the DOR assigns your schedule once you register and can change it as your payroll grows.

3. Register for SUI with the DUA

Next, register with the Department of Unemployment Assistance (DUA) for a State Unemployment Insurance account. New employers start at a rate of 2.42% (6.08% for construction) on the first $15,000 of each employee's wages in 2026. This tax is entirely employer-paid; nothing comes out of an employee's check for it.

After a couple of years of history, your rate becomes experience-rated, which means it moves up or down based on how many former employees have filed unemployment claims against your account. Filing and payment happen quarterly through the DUA's online system.

4. Collect Employee Paperwork

Before anyone works their first shift, collect three documents:

• Form I-9, verifying work eligibility. Section 2 must be completed within three business days of the start date.
• Federal Form W-4, for federal withholding.
• Form M-4, the Massachusetts Employee's Withholding Exemption Certificate. Without it, you must withhold state tax as if the employee claimed no exemptions at all.

You'll also need to report the new hire to the state. Massachusetts requires new-hire reports within 14 days of the start date, sent through MassTaxConnect or the paper form, which is a shorter window than the federal 20-day default most states rely on.

5. Set a Legal Pay Schedule

Massachusetts treats hourly and salaried employees differently. Hourly, non-exempt workers must be paid weekly or biweekly, and wages are due within six days of the end of the pay period. Salaried exempt employees can be paid semimonthly, and monthly only if the employee affirmatively chooses that option for themselves.

Final pay rules are stricter still: an employee who is fired must be paid in full on the day of termination, and one who quits must be paid by the next regular payday. Get this wrong and the Massachusetts Wage Act allows for treble damages, so it's worth putting the rule on a calendar rather than trusting memory.

6. Run Payroll and Make Deposits

Each pay period, calculate gross wages, apply federal withholding based on the W-4, apply Massachusetts withholding based on the M-4, and withhold the employee's share of Social Security and Medicare. You then owe a matching FICA amount as the employer, plus federal and state unemployment tax.

Federal deposits follow the IRS's semiweekly or monthly schedule and get reported quarterly on Form 941. State withholding deposits follow the schedule the DOR assigned you at registration. If you'd rather see the take-home number before you run a check, our paycheck calculator handles federal and Massachusetts withholding together, and the W-4 helper walks new hires through both the federal and state forms.

7. Close Out the Year

W-2s go out to employees and to the Social Security Administration by January 31. Massachusetts also expects an annual withholding reconciliation, filed through MassTaxConnect, so the totals on your W-2s match what you deposited across the year. Late W-2s carry federal per-form penalties that climb the longer they sit unfiled, so build the reconciliation into your December checklist rather than your February scramble.

Frequently Asked Questions

How do I set up payroll for the first time in Massachusetts?

Get a federal EIN from the IRS, register with the Massachusetts Department of Revenue for withholding, register with the Department of Unemployment Assistance for a SUI account, collect I-9, W-4, and M-4 forms from each employee, then pick a pay schedule and run your first payroll.

What state tax form replaces the W-4 in Massachusetts?

Massachusetts employees fill out Form M-4, the Employee's Withholding Exemption Certificate, alongside the federal W-4. If an employee skips the M-4, you withhold state tax as if they claimed zero exemptions.

How often do Massachusetts employers have to pay employees?

Most hourly employees must be paid weekly or biweekly, with wages due within six days of the end of the pay period. Salaried exempt employees can be paid semimonthly, or monthly if they choose that option themselves.

When do new hires need to be reported in Massachusetts?

Massachusetts employers must report every new hire and rehired employee within 14 days of the start date, which is stricter than the federal 20-day standard most states use.