Maryland Just Opened Registration for a New Payroll Tax — Here's Your Nov. 15 Deadline

If you have even one employee working in Maryland, a new payroll deduction is coming to your business whether you've heard of it or not — and the clock to make a key decision about it started ticking on September 1, 2026.

Maryland's Family and Medical Leave Insurance program, known as FAMLI, opened employer registration this month, Governor Wes Moore's office announced. Payroll contributions begin January 1, 2027. If you run payroll in Maryland, you now have a narrow window to decide how you want to handle it — and getting it wrong could mean paying into a state fund you didn't need to.

What FAMLI Actually Costs You

Starting with wages paid on or after January 1, 2027, Maryland will collect a payroll contribution of 0.9% of each employee's wages, up to the Social Security wage base. For businesses with 15 or more employees, that cost is split evenly: 0.45% comes out of the employee's paycheck, and you cover the other 0.45% as the employer.

If your business has fewer than 15 employees, you catch a break on the employer share. Small employers are exempt from the 0.45% employer contribution — but you're still required to register, withhold the employee's 0.45% share from wages, and remit it to the state every quarter. In other words, there's no exemption from the paperwork, only from paying half the bill yourself.

The money funds a real benefit for your workers: starting in January 2028, eligible employees can receive up to 12 weeks of paid leave (with a possible additional 12 weeks for parental bonding) at up to $1,000 a week, for qualifying family or medical reasons. To qualify, an employee generally needs to have worked at least 680 hours in Maryland over the four calendar quarters before filing a claim.

The Deadline That Actually Matters Right Now

Here's the part most small business owners are going to miss: Maryland is giving employers a choice between using the state's insurance fund or an approved private plan that meets or exceeds the state's benefits. But to avoid contributing to the state fund during its startup "seeding period," you have to file a Declaration of Intent to use a private plan between September 1 and November 15, 2026.

Miss that window, and you'll be defaulted into paying contributions to the state fund starting in January regardless of whether you later switch to a private plan. For a business that already has, or wants to shop for, a private disability or paid leave policy that satisfies Maryland's requirements, that seven-week window is the difference between paying once and potentially paying twice while a private plan application works its way through approval.

What You Need to Do Before January

• Register with the state. Employer registration is live now at Maryland's FAMLI portal, and every employer with a Maryland worker needs an account regardless of size or whether you plan to use a private plan.
• Decide: state plan or private plan. If you want to explore a private plan to control costs or bundle it with existing benefits, get quotes now — the Declaration of Intent deadline is November 15, 2026.
• Update your payroll system. Whether you're a 3-person shop or a 40-person company, your payroll provider needs to be withholding the employee share correctly starting with the first payroll of January 2027.
• Budget for the employer share if you have 15+ employees. A 0.45% payroll cost sounds small until you run it against your full wage base — worth adding to your profit and loss statement projections for 2027 now rather than discovering it in Q1.

Counting Employees Is Trickier Than It Sounds

The 15-employee threshold that determines whether you owe the employer share isn't necessarily a simple headcount on a random Tuesday. Maryland's rules look at your average number of employees over specific periods, and if you're close to the line — say, 12 to 18 employees, or your headcount fluctuates seasonally — it's worth getting a definitive read from Maryland's Department of Labor or a payroll professional rather than guessing. Businesses that assume they're exempt and turn out not to be face contribution shortfalls plus penalties.

If you're a newer business still sorting out your basic structure — how you're paying yourself, whether you've got a dedicated business bank account separating payroll from personal funds, or whether your entity type is even set up correctly — this is also a good moment to get that foundation solid before a new mandatory payroll obligation lands on top of it. Our guide to getting an EIN is a useful starting point if you haven't formalized your payroll setup yet.

Why This Is Happening Now

Maryland passed the underlying FAMLI law back in 2022, but implementation was delayed multiple times as the state built out the fund structure and wrote final regulations. Contribution collection was originally supposed to start in 2024, then 2025, and has now landed on January 2027 — with this fall's registration window and Declaration of Intent deadline representing the last major runway before money actually starts coming out of paychecks.

Maryland joins a growing list of states — including Delaware, Maine, Minnesota, and others — that have stood up their own paid family and medical leave insurance programs in recent years, each with its own contribution rate, employer size thresholds, and private-plan rules. If you operate across state lines, it's worth building a simple tracker of which states you have payroll obligations in and when each one's contribution schedule kicks in, because Maryland's timeline won't match your other states'.

A Real-World Example

Say you run a 20-person landscaping company in Baltimore County. You're above the 15-employee threshold, so starting January 1, 2027, you'll owe the 0.45% employer contribution on top of the 0.45% you withhold from each crew member's paycheck. On a $45,000-a-year employee, that's roughly $200 a year in employer cost — manageable on its own, but multiplied across 20 workers it's about $4,000 a year your budget needs to absorb. Now say you already offer a private short-term disability policy through a broker that's more generous than the state's minimum benefit. Instead of defaulting into the state fund, you could file a Declaration of Intent between September 1 and November 15, 2026, to use that private plan instead — potentially controlling your costs more precisely and avoiding contributing to Maryland's fund during its startup period. Miss the November 15 deadline, though, and you're paying into the state fund starting in January regardless of what private coverage you arrange afterward.

Common Questions Small Employers Are Asking

Do out-of-state employers with a single Maryland remote worker have to comply?

Generally, yes — the obligation follows where the employee's work is localized, not where your company is headquartered. If you have even one employee working from Maryland, you likely need to register and withhold contributions for that worker.

What happens if I don't register in time?

Late registration doesn't eliminate the contribution obligation — you'll still owe contributions retroactive to January 2027, plus potential penalties and interest, and you lose the opportunity to elect a private plan for the seeding period.

Can I pass more of the cost to employees?

No. The 50/50 split for employers with 15 or more employees, and the employee-only contribution for smaller employers, are set by the state; you can't restructure who pays what share.

The Bottom Line

You have until November 15, 2026, to decide whether Maryland collects your FAMLI contributions through its state fund or through a private plan you choose — and until January 1, 2027, to have your payroll system ready to withhold correctly either way. Whether you employ 3 people or 300, register now, so you're not scrambling in December.

Photo by Amy Hirschi on Unsplash