MA Employee Withholding Calculation

State Income Tax

Employers in Massachusetts must give employees an M-4 form, or state withholding exemption certificate, for state income tax withholding purposes. The employee puts her withholding conditions on the form, including dependents and total exemptions. The employer uses the employee's M-4 and the Massachusetts Circular M or income tax withholding tables to figure out the amount of state income tax to withhold.

Specifically, the employer obtains the employee's exemptions from line 4 of her M-4; then he applies the wage bracket formula in the Circular M that matches the employee's pay period, wages and number of exemptions -- the withholding table gives the exact amount of tax to withhold based on this information. If the employee wants additional tax withheld, as shown on line 5 of her M-4, the employer adds the extra amount to the withholding amount he derived from the Circular M.

A child support withholding order must come from the court to be valid. Once an employer receives a Massachusetts child support withholding order, he must begin the withholding by the upcoming payroll period after he receives the order. Massachusetts adheres to federal child support withholding limits, which says an employer cannot withhold more than 50 percent of an employee's disposable pay for child support if the employee is supporting other children in her household, and up to 60 percent if she isn't. An employer can withhold an extra 5 percent if the employee is over 12 weeks late in child support payments. Disposable pay is the employee's income after legally required deductions, such as federal and state income tax.

All employers in the U.S., including those in Massachusetts, must withhold federal income tax, Social Security tax and Medicare tax, unless the employee is exempt. To calculate federal income tax, the employer uses the employee's W-4 form -- comparable to his M-4 -- and the IRS Circular E -- comparable to the Massachusetts Circular M -- to figure out federal income tax. At the time of publication, the employer computes Social Security tax at 4.2 percent of the employee's gross wages up to $106,800 for the year and Medicare tax at 1.45 percent of all gross wages.

A Massachusetts employer pays state income tax withholding to the state department of revenue, according to the frequency the agency mandates; pay schedules depend on the total withholding tax for the year. The employer sends child support withholding to the payment-processing center shown on the withholding order. She pays federal income tax, Social Security tax and Medicare tax withholding to the IRS, typically semiweekly or monthly.