Maryland Employer Registration: Withholding, Unemployment Insurance and Payroll Taxes
Maryland Employer Registration: Withholding, Unemployment Insurance and Payroll Taxes
The first time you put someone on a Maryland payroll, you take on several separate state obligations. You have to withhold Maryland income tax from employee pay, register with the Maryland Department of Labor for unemployment insurance, and keep payroll records that support both. The Comptroller and Labor run different accounts with different numbers and different schedules, and registering with one does not register you with the other. This guide covers the Maryland side of employer registration, the figures you need for 2026, and where to confirm each one.
Disclaimer: This is informational content, not legal or tax advice. Your entity type, headcount, and where your employees live and work can change which rules apply to you. Confirm every figure with the agency named before you rely on it, and talk to a CPA or payroll professional about anything more complicated than a few hires.
Order of operations before your first paycheck
Maryland registration builds on federal registration, so the sequence matters. Work through these steps in order and finish each one before you run payroll:
- Get a federal Employer Identification Number (EIN) from the Internal Revenue Service.
- Register for state income tax withholding through the Comptroller of Maryland's Combined Registration Application.
- Register for unemployment insurance as a separate account with the Maryland Department of Labor.
- Confirm the administrative fee and payment setup with the Division of Unemployment Insurance.
- Set up a payroll calendar that covers the withholding and unemployment deadlines each agency assigns to your accounts.
Start with a federal EIN
Before you apply with Maryland, get a federal EIN from the IRS. You will use it on state applications and on every federal payroll filing. Federal Social Security, Medicare, and federal income tax withholding follow federal rules and are outside the scope of this guide, so check IRS guidance for those obligations before your first payroll.
The three Maryland pieces of employer registration
Maryland employer registration has three parts, and each one has a different owner:
- State income tax withholding is registered with the Comptroller of Maryland through the Combined Registration Application.
- Unemployment insurance is a separate account with the Maryland Department of Labor, Division of Unemployment Insurance. The Comptroller's withholding registration does not open it for you.
- Local income tax withholding follows the employee's county, not your business address. One business can have employees subject to different county rates, so track each worker's county from the start.
Workers' compensation insurance is a different requirement with its own rules, and it is covered on a separate page. Do not assume that finishing the steps in this guide satisfies it.
Step 1: Register for withholding
Withholding is registered through the Combined Registration Application, which you file through Maryland Business Express at egov.maryland.gov/businessexpress. The taxes and insurance starting page is at businessexpress.maryland.gov/start/taxes-and-insurance, and the Comptroller's main site is marylandcomptroller.gov. The same application is how a business obtains a free Sales and Use Tax License if it sells taxable goods. If you will both sell and hire, register for both in one filing so you do not have to chase two sets of numbers later.
Once the account is active, you withhold state income tax from each paycheck using the employee's withholding certificate and the Comptroller's current withholding tables. You then remit the withheld amounts on the schedule the Comptroller assigns to your account. Confirm the tables and deposit schedule with the Comptroller before your first payroll, because the schedule is set per account and is not the same for every employer.
Maryland's personal income tax is graduated, with a state rate of 2% to 6.5%. Counties and Baltimore City add a local income tax of 2.25% to 3.30% for 2026, based on the employee's county. Those rates apply to the employee's income, but you are the one who withholds them, so they drive the numbers on every paycheck you process.
Step 2: Register for unemployment insurance
Unemployment insurance is funded by employers and administered by the Maryland Department of Labor. Register with Labor directly. Your withholding account does not create an unemployment account, and the unemployment account is the one that sets the rate you pay and the wages you report against it.
The $8,500 taxable wage base
Maryland taxes only the first $8,500 of each employee's wages per year for unemployment insurance. Wages above that amount are not taxed for unemployment purposes. A 2026 bill, HB 188, would have raised this base, but it was not enacted, so $8,500 is the figure to use. Because bills change these numbers, confirm the current base with Labor before you file.
Here is how the math works. If an employee is paid $52,000 in a year, only the first $8,500 is taxable for unemployment insurance. At a 1.0% rate, the tax on that employee is $85 for the year. At 2.6%, it is $221. The rate you pay is the variable, so the rate section below matters as much as the wage base.
The rate you pay
Labor lists the new-employer rate as a range of 1.0% to 2.6%. A new employer is assigned a rate within that range, and that rate is not permanent. Maryland generally adjusts an employer's rate over time based on the account's experience under the tax table in effect. Tax Table A is in effect for 2026, and its contributory rates run from 0.30% to 7.50%. Ask the Division of Unemployment Insurance how your rate will be recalculated after your first year.
The 2026 administrative fee
Beginning January 1, 2026, each contributory employer pays an annual administrative fee equal to 0.15% of its taxable wage base. At the same time, its assigned rate is reduced by 0.15 percentage points. Under the same rule, a new employer pays a rate of at least 1%, which sits at the bottom of Labor's new-employer range. This fee comes from Chapter 604 of 2025, the Budget Reconciliation and Financing Act (HB 352).
Labor's rate page does not describe the fee. Confirm the timing and manner of payment with the Division of Unemployment Insurance before you calculate your first year's tax, and do not assume it is billed the same way as your quarterly unemployment payments.
Payroll records to keep from day one
Both agencies will ask for wage and withholding detail, so set up your records before the first paycheck, not after. For each employee, keep the date of hire, gross wages paid, state and local income tax withheld, and the employee's county. Track year-to-date unemployment wages separately, since the $8,500 base resets each year and you will need the running total to avoid over- or under-reporting.
Keep these records in one system, whether that is payroll software, a spreadsheet, or a bookkeeper's files. The reports you file with the Comptroller and Labor should reconcile to the same numbers. If they do not, fix the difference before the next filing rather than carrying it forward.
Common mistakes to avoid
- Assuming the Comptroller's withholding registration also covers unemployment insurance.
- Calculating unemployment tax on full wages instead of the first $8,500 per employee.
- Using an old wage base or rate from a prior year, or treating a bill that was not enacted as current law.
- Applying one county rate to every employee instead of the county that applies to each employee.
- Forgetting that the 0.15% administrative fee began in 2026, and that a new employer's rate starts at no less than 1%.
- Waiting until the first filing deadline to ask how each agency assigns its schedule.
What this guide does not cover
Workers' compensation is a separate requirement, and it has its own registration and coverage rules. Federal payroll taxes are also outside this guide. Maryland runs other payroll-funded programs, including a paid family and medical leave program, so ask the Department of Labor which ones apply to your business and how they are reported.
Registration checklist
| Step | Agency | What you receive | Confirm with |
|---|---|---|---|
| 1. Federal EIN | Internal Revenue Service | Federal Employer Identification Number | IRS guidance on EINs |
| 2. Withholding registration | Comptroller of Maryland | Withholding account, plus a Sales and Use Tax License if you sell taxable goods | Comptroller at marylandcomptroller.gov, filing through Maryland Business Express |
| 3. Unemployment account | Maryland Department of Labor | Unemployment insurance account and assigned rate | Division of Unemployment Insurance |
| 4. Administrative fee setup | Maryland Department of Labor | Fee payment method and timing | Division of Unemployment Insurance |
| 5. Payroll calendar | Both agencies | Withholding deposit schedule and unemployment reporting dates | The schedules assigned to your accounts |
When to get professional help
Talk to a CPA or payroll provider before your first payroll if you have employees in more than one county, if you are unsure whether a worker is an employee or a contractor, or if you are paying wages that cross the $8,500 base early in the year. Ask an attorney about entity structure and owner-employee questions, since those affect how income and payroll are reported.
Official sources to check
- Comptroller of Maryland: marylandcomptroller.gov
- Maryland Business Express (Combined Registration): egov.maryland.gov/businessexpress
- Maryland Business Express, taxes and insurance: businessexpress.maryland.gov/start/taxes-and-insurance
- Maryland Department of Labor, Division of Unemployment Insurance: search the Department of Labor website for the current tax table and the administrative fee guidance, since the rate page does not describe the fee.