Another New Maryland Payroll Tax Is Coming January 1, 2027

The program will provide eligible workers with up to 12 weeks of partially paid, job-protected leave. This is in addition to the federal Family and Medical Leave Act (FMLA), which generally provides unpaid, job-protected leave. Maryland’s FAMLI program provides paid benefits funded by a mandatory tax.

Participation is not optional for Maryland employees. Workers cannot opt out simply because they do not want or expect to use the benefits.

How Much Will This Cost You?

The initial contribution rate for the state program is 0.9% of covered wages, generally divided between employees and employers.

Employees: Up to 0.45% of wages will be deducted from paychecks initially.
Employers with 15 or more employees: Generally must contribute the other 0.45%.
Smaller employers: Those with fewer than 15 employees are not required to contribute an additional employer share, but must collect and remit the required employee contributions.
State and local government employers: Must also comply, creating additional personnel costs ultimately borne by taxpayers.

For a Maryland worker earning $60,000 annually, the new payroll deduction could total $270 per year. An employee earning $100,000 could lose $450 annually in take-home pay.

And that is just the beginning. The state will adjust contribution rates annually, and under current law, the total rate can rise as high as 1.2% of covered wages. I’m sure it will increase to at least 1.2%. While the initial rate is 0.9%, I am certain that future increases will be necessary to keep this massive new program financially afloat.

Important Deadline for Maryland Employers

November 15, 2026 — Private Plan Declaration Deadline

Employers who intend to provide an approved private insurance or self-insured plan instead of participating in the state program must submit a Declaration of Intent by November 15, 2026.

Employers with an accepted declaration will still be required to collect and set aside contributions beginning January 2027, but will hold those funds in a separate escrow account rather than immediately sending them to the state.

All employers with at least one employee working in Maryland are required to register for FAMLI. Employers who do not pursue an approved private plan will participate in the state program.

January 1, 2027 — Payroll Contributions Begin

April 2027 — First Quarterly Employer Reports and State Plan Payments

January 2028 — Employees Can Begin Receiving Benefits

I support helping families facing serious medical challenges and caring for loved ones. But I do not believe the solution is to force every worker and business into another expensive government program.

I opposed this program from the beginning. So did Governor Larry Hogan, who vetoed the legislation. This debate has continued in Annapolis for years. In 2022, the Democrat-controlled General Assembly passed the Time to Care Act, establishing FAMLI. Governor Larry Hogan vetoed the legislation, warning about the program’s costs and flaws.

I voted against the legislation and supported Governor Hogan’s veto. Unfortunately, liberal Democrats overrode his veto and forced this costly program into law.

Four years later, Maryland businesses are still trying to navigate the complicated regulations, administrative requirements, and financial obligations. Implementation has been repeatedly delayed.

Maryland already has private insurance products and employer-sponsored benefits that provide paid family and medical leave. Rather than encouraging more affordable, flexible options, Annapolis Democrats chose to create a massive, mandatory statewide insurance program. Big government programs are expensive and innificient.

Now every Maryland employer must navigate another government bureaucracy, and workers will have another deduction from their paychecks.

At a time when Maryland families are struggling to afford groceries, electricity, housing, and higher taxes, the last thing they need is another tax taken from their paychecks.

See more information on the program below. Questions can be directed to the Department of Labor — [email protected] | 410-525-4010.