Starting with wages paid on January 1, 2027, every Maryland employer has a new payroll line: FAMLI contributions. The state plan rate is 0.9% of wages, and it applies whether you have 3 employees or 300.
Benefits do not start until January 1, 2028. The contributions start now, though, so your payroll system, your employee notices, and your 2027 budget all need to be ready before your first January payday. Here is what that means for a Maryland small business, with real numbers.
What FAMLI is, in one paragraph.
FAMLI (Family and Medical Leave Insurance) is Maryland’s paid leave program, run by the Maryland Department of Labor. Once benefits begin in 2028, eligible employees can take up to 12 weeks of paid, job-protected leave, with weekly benefits of up to $1,000. Employers and employees fund it through payroll contributions that begin in 2027.
The 2027 rates.
The total state plan rate for 2027 is 0.9% of wages, up to the Social Security wage cap. The 2027 Social Security wage base is $192,300, so no employee’s contributions are calculated on wages above that amount.
Who pays depends on how many employees you have.
| Employer size | Employer share | Employee share | Total remitted |
|---|---|---|---|
| 15 or more employees | 0.45% | Up to 0.45% (may be withheld from pay) | 0.9% |
| Fewer than 15 employees | None required | 0.45% (withhold it, cover it, or split it) | 0.45% |
Two details matter for the count. First, every employee under the same EIN counts, including people who work outside Maryland. Second, independent contractors do not count toward employer size. In 2027 the state measures size each quarter. Starting in 2028, it uses the average of the previous four quarters.
The rate can change. The Department of Labor will announce the next year’s rate each November starting in 2027, and the total cannot go above 1.2% of wages.
What it costs, in dollars.
Three examples using the 2027 rates:
- One employee earning $60,000. Total contribution of $540 for the year. At a 15+ employee company, that is $270 from the employer and up to $270 from the employee.
- A 10-person Baltimore firm with $500,000 in total wages. Under 15 employees, so only the 0.45% employee share applies: $2,250 for the year. The owner decides whether employees pay it through withholding or the business absorbs it.
- A 20-person contractor with $1.1 million in wages. The full 0.9% applies: $9,900 for the year. The employer share alone is $4,950.
An employee earning $250,000 only pays on the first $192,300. That caps total contributions at $1,730.70 for that person in 2027.
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Get the sample packageFive things to do before your first 2027 payroll.
1. Register with FAMLI.
Any employer with at least one employee working in Maryland must register, whether you use the state plan or a private plan. Registration is done once per EIN, by an authorized officer of the business, through the state’s FAMLI portal.
2. Decide who pays the employee share.
You may withhold up to 0.45% from employee pay, but you are not required to. Some owners cover it as a retention perk. On $60,000 of salary that is $270 a year per person. Make the call now, because it changes both your budget and the notice you send employees.
3. Tell employees before deductions start.
If you plan to withhold, employees need written notice at least one pay period before the first deduction. Employees cannot opt out. With January 1 falling on a Friday holiday, most businesses should send the notice in early December.
4. Set up the deduction in your payroll software.
Confirm that Gusto, QuickBooks Payroll, ADP, or whatever you use has the Maryland FAMLI deduction turned on, at the right rate, for the right employees. Only employees working in positions localized in Maryland are covered. If you have remote staff in Virginia or Pennsylvania, check each employee’s work location. If you are still choosing a provider, our Gusto vs QuickBooks Payroll comparison walks through the two most common options.
5. Add the accounts to your chart of accounts.
Set up a payroll tax expense account for the employer share and a liability account for amounts withheld from employees. Withheld money is not yours. It sits as a liability until you remit it each quarter, and it should reconcile to zero after every payment.
Quarterly reporting and payment dates.
Contributions are reported and paid quarterly through the FAMLI portal at paidleave.maryland.gov. The first payment covers January through March 2027 wages.
| Wages paid | Report and payment due |
|---|---|
| Jan 1 to Mar 31, 2027 | April 30, 2027 |
| Apr 1 to Jun 30, 2027 | July 31, 2027 |
| Jul 1 to Sep 30, 2027 | October 31, 2027 |
| Oct 1 to Dec 31, 2027 | January 31, 2028 |
Every employer files the quarterly wage and hour report, including employers with an approved private plan. Put these dates on the same calendar as your 941s and Maryland withholding returns. Our Maryland small business tax deadlines post has the rest of the calendar.
Three mistakes we expect to see.
Trying to catch up later. Contributions cannot be deducted after the pay period ends. If a paycheck is too small to cover the deduction, you have up to six pay periods to collect the balance. If you forget to turn it on in January, you may end up paying the missed employee share yourself.
Miscounting employees. A business with 12 Maryland employees and 4 in Delaware has 16 employees for FAMLI. That puts it in the full 0.9% bracket, not the 0.45% one.
Booking withholdings as expense. If the employee share lands in a payroll tax expense account instead of a liability, your P&L overstates costs and your balance sheet hides money you owe the state. Your year-end tie-out will not match. Our year-end close checklist shows how to tie payroll to the books.
Put it in the 2027 budget now.
If you are building next year’s budget this month, add FAMLI as its own line under payroll taxes. Do not bury it in “other.” A separate line makes it easy to check each quarter’s payment against what you planned.
The simple formula: total expected 2027 Maryland wages, capped at $192,300 per person, times your employer rate (0.45% at 15 or more employees, 0% under 15). If you decide to cover the employee share too, add another 0.45%. A business that grows past 15 employees mid-year should plan for the higher rate from that quarter on.
What about a private plan?
Employers can apply to use a private insurance plan instead of the state plan, as long as it offers benefits at least equal to the state plan. To avoid sending 2027 contributions to the state, the Declaration of Intent had to be filed between September 1 and November 15, 2026. Most small businesses will use the state plan. If you are weighing a private plan, talk to a licensed Maryland insurance agent this week.
How we help.
At RS Accounting Services we run payroll and bookkeeping for small businesses across Baltimore and Maryland. For FAMLI, that means confirming your registration, setting up the deduction in your payroll system, mapping it to the right accounts, and filing each quarter on time. Your CPA (or our tax partner Veritax USA in Bethesda) gets payroll numbers that already tie out.
If you are not sure your payroll is ready for January, call us at (410) 694-7230 or book a free call below.
This article is general information, not tax advice. Talk to your CPA about how these rules apply to your business.