First things first, for Uncle Sam’s sake, let’s calculate your federal payroll taxes.
Here’s a streamlined overview of what goes into federal payroll tax withholdings:
- Gross wages refer to the total amount an employee earned during the most recent pay period.
- For hourly workers, multiply hours worked by the hourly wage, and don’t forget to include any overtime.
- For salaried employees, divide their annual salary by the number of pay periods in the year.
- Bonuses, tips, and commissions are also part of gross pay.
- Pre-tax deductions come next. If employees contribute to things like a 401(k) or a flexible spending account (FSA), subtract those contributions before calculating taxes.
- Federal income tax should then be withheld. Rates can range from 0% up to 37%, depending on the employee’s withholding information. (For specifics, refer to IRS Publication 15-T.)
- FICA taxes help fund Social Security and Medicare and must be both withheld from employees and matched by employers:
- Social Security: Withhold 6.2% of taxable wages up to an annual limit of $176,100. You’ll match this amount.
- Medicare: Withhold 1.45% of all taxable wages, also matched by the employer. For earnings above $200,000, an additional 0.9% Medicare tax is withheld from the employee (bringing their total to 2.35%), but employers do not match this extra amount.
- FUTA (Federal Unemployment Tax) is another employer-paid tax. It’s 6% of the first $7,000 in taxable wages per employee. However, you can earn a tax credit of up to 5.4% if you pay your state unemployment taxes in full and on time, potentially reducing your FUTA tax to just 0.6%.
- Lastly, post-tax deductions may apply. These aren’t as common but can include items like wage garnishments, child support, or other court-ordered payments. Be sure to account for them if applicable.
Simplify State Tax Registrations with Middesk
Need help getting set up with state agencies? Beyond partners with Middesk to make it easier to manage your business's state registrations and stay compliant, no matter where your employees are located.
With Middesk, you can:
• Register for required tax IDs and agency accounts quickly and securely
• Manage all your state accounts through a single, user-friendly platform
• Track compliance and government correspondence directly from your dashboard
• Complete “foreign qualification” steps with the Secretary of State for multi-state compliance
Maine State Payroll Taxes
Now that we’ve covered the federal side, let’s look at Maine’s state-level payroll taxes.
- Maine’s income tax is structured as a progressive tax with three brackets, ranging from 5.8% to 7.15%, depending on the employee’s income level.
- There are no local or municipal income taxes in Maine — so employees only pay the state income tax.
Staying Compliant in Maine
- Workers’ compensation insurance is mandatory in most states, including Maine. This insurance protects your employees if they experience workplace injuries or illnesses. For more, see our comprehensive guide to workers’ comp coverage in Maine.
Maine State Unemployment Insurance (SUI)
As a Maine employer, you are responsible for paying state unemployment insurance (SUI):
- The tax rate ranges from 0.00% to 6.27% on the first $12,000 in wages per employee each calendar year.
- If you’re a new employer, your default SUI rate is 2.04%.
Have employees working in other states?
If your business operates across state lines or has remote team members based in different states, it’s essential to make sure the proper state paperwork is completed for each location. Beyond takes care of filing the necessary forms in every state where your employees are on payroll, helping you stay compliant no matter where your team works.
