Withholding Taxes: Massachusetts

Federal law and guidance on this subject should be reviewed together with this section.

Author: Vicki M. Lambert, The Payroll Advisor

Summary

• Massachusetts employers are required to withhold state income tax from the wages of residents for services performed either within or outside Massachusetts. Certain rules apply to Massachusetts residents who work in another state in order to avoid double withholding. Wages paid to nonresidents for services performed in Massachusetts are subject to withholding. Massachusetts does not have reciprocal agreements with any other state. See Withholding on Residents, Nonresidents and Expatriates.
• Massachusetts has its own withholding allowance certificate, Form M-4, Massachusetts Employee's Withholding Exemption Certificate. See Employee Withholding Forms.
• Supplemental wages, such as bonuses, are taxed using a special formula. See Supplemental Wages.
• If an employer is required to file federal Forms W-2, Wage and Tax Statement, for federal income tax purposes, and the employer reported Massachusetts wages on Forms W-2, the employer must file the Forms W-2 and an annual reconciliation. See Form W-2 Requirements.
• Massachusetts employers must maintain certain records for state income tax purposes for at least three years. See Recordkeeping Requirements.