Maryland FAMLI 2027: Payroll Withholding Begins January 1 — Rates, Employer Size Rules and What to Configure Before Year-End
Maryland’s FAMLI program enters its contribution phase on January 1, 2027. The 0.9% rate was confirmed in April 2026. Employers must configure payroll deductions, determine their employer size tier, and notify employees before year-end.
- Maryland FAMLI payroll withholding begins January 1, 2027 at 0.9% of covered wages up to the Social Security wage base.
- Employer size includes all employees, not just Maryland workers. 10 MD + 8 out-of-state = 18 total = large employer.
- Employers with fewer than 15 employees are exempt from the employer contribution but must withhold the employee share.
- Benefits begin January 1, 2028 — eligible employees can take up to 12 weeks paid, job-protected leave.
- A private plan option is available. Applications open fall 2026; approval required before January 1, 2027.
What Maryland FAMLI Is and the 2027 Timeline
Maryland’s Family and Medical Leave Insurance (FAMLI) program was enacted in 2022. After several legislative amendments that extended its timeline, the program is now on a firm schedule: payroll withholding begins January 1, 2027, and eligible employees can begin drawing benefits starting January 1, 2028. The program will provide up to 12 weeks of paid, job-protected leave per year for qualifying family and medical reasons, with a weekly benefit cap of $1,000.
| Milestone | Date | What Happens |
|---|---|---|
| Employer registration | Spring 2025 | Employers with at least one Maryland employee required to register |
| Contribution rate announcement | April 2026 | MD Labor confirmed 0.9% rate for 2027 |
| Payroll withholding begins | January 1, 2027 | Employers begin deducting employee share and remitting combined contributions |
| First quarterly remittance | April 30, 2027 | Q1 2027 contributions due to MD Labor |
| Benefits begin | January 1, 2028 | Eligible employees may file claims; up to 12 weeks paid leave |
Contribution Rate: 0.9% Confirmed for 2027
In April 2026, the Maryland Department of Labor reaffirmed the FAMLI contribution rate at 0.9% of covered wages up to the Social Security wage base ($184,500 for 2026; the 2027 base will be announced in fall 2026). This rate applies to wages paid from January 1, 2027 through December 31, 2027.
| Component | Rate | Applied To |
|---|---|---|
| Total contribution rate | 0.9% | Covered wages up to Social Security wage base |
| Maximum employee share (withheld) | 0.45% | 50% of total rate; employer may cover more |
| Employer share (15+ employees) | 0.45% | At minimum 50% of total rate |
| Small employer (<15 employees) employer share | 0% | Small employers exempt from employer contribution; may withhold full 0.9% from employees |
| Maximum total rate under law | 1.2% | Statutory cap; MD Labor cannot set rate above this |
Starting in November 2027, MD Labor will announce the 2028 contribution rate. The rate may change annually based on actuarial estimates of the fund’s sustainability, subject to the 1.2% statutory maximum.
Employer Size Tiers and Who Pays What
Maryland FAMLI uses a two-tier employer size system. Employer size for each quarter is determined based on the total number of employees counted across all locations — including employees working outside Maryland.
| Employer Size | Employer Contribution | Employee Contribution (withheld) | Total Rate |
|---|---|---|---|
| 15 or more employees | 0.45% (minimum) | Up to 0.45% | 0.90% |
| Fewer than 15 employees | 0% (exempt) | Up to 0.45% | 0.45% (employee only) |
During 2027, employer size will be determined each quarter based on the quarterly wage and hour reports filed with the FAMLI Division. Beginning in 2028, the FAMLI Division will average the four prior quarters to determine employer size for the full following year. Employers near the 15-employee threshold should monitor their headcount each quarter during the transition year.
Employee Contribution and How Withholding Works
Employers withhold up to 0.45% of each covered employee’s wages per pay period and remit it together with the employer contribution on a quarterly basis. Employees who are not receiving wages — for example, while receiving workers’ compensation or on unpaid leave — do not owe FAMLI contributions during those periods, and neither does the employer.
Employers may voluntarily elect to pay the full 0.9% themselves without withholding any portion from employees, though this may have tax implications for the employer (consult a tax advisor on the deductibility and gross-up treatment).
Payroll System Configuration
Employers must configure their payroll systems to begin deducting the FAMLI employee contribution with wages paid on or after January 1, 2027. The following system settings will need to be established:
| Configuration Item | Value / Setting |
|---|---|
| Contribution rate (employee deduction) | Up to 0.45% of covered wages per pay period |
| Wage base cap | Social Security wage base for 2027 (announced Oct/Nov 2026) |
| Employer contribution (15+ employees) | 0.45% matched by employer |
| Quarterly remittance schedule | Due 30 days after end of each quarter (Apr 30, Jul 31, Oct 31, Jan 31) |
| Covered wages scope | Maryland employees only; out-of-state employees do not contribute |
| Exempt periods | No deduction when employee is receiving Workers’ Comp or on unpaid leave with no wages |
Action Checklist
- Automatic federal tax table updates
- Multi-state withholding engine
- ADP, Paychex & Dynamics 365 sync
- Built-in compliance audit trail
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