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Updated: August 7, 2023
As the most eastern state in the country, Maine is where the sun shines first every morning. In an ironic twist, Maine is also where Stephen King, AKA The King of Horror, writes his novels, in which his fictional characters often don’t get to see the morning sun. As a small business owner in Maine, you have your own horror to deal with. Whether you cook up yummy clam chowder in Portland or serve up tasty cocktails in Augusta, payroll taxes can often seem like a bad dream.
We want to take the horror out of your payroll tax duties, so we’ve designed a nifty payroll calculator that can figure out all of the federal and Maine state payroll taxes for you and your employees. All you have to do is input wage and W-4 information for each employee into the calculator and let it do the rest of the work.
Federal payroll taxes for Maine employers
First of all, for Uncle Sam’s sake, let’s calculate federal payroll taxes. Here’s a quick rundown of the components that go into federal tax withholdings. For a more detailed explanation of all of the steps below, head on over to our comprehensive step-by-step guide.
- Gross wages, which is simply the amount of money an employee has earned during the last pay period.
- For hourly employees, multiply the number of hours worked by their pay rate — and make sure you don’t forget to take overtime into consideration.
- For salaried employees, divide each employee’s annual salary by the number of pay periods you have over the course of a year.
- Bonuses, commissions, and tips are all part of gross wages as well.
- Calculate any pre-tax withholdings. If your employees have 401(k) accounts, flexible spending accounts (FSA), or any other pre-tax withholdings, subtract them from gross wages prior to applying payroll taxes.
- Deduct federal income taxes, which can range from 0% to 37%. We won’t get into the nitty-gritty here, but you can find further withholding information through the IRS Publication 15-T.
- Deduct and match any FICA taxes to cover Medicare and Social Security taxes:
- For Social Security tax, withhold 6.2% of each employee’s taxable wages until they have earned $160,200 in a given calendar year. Employers must match this tax.
- For Medicare tax, withhold 1.45% of each employee’s taxable wages until they have earned $200,000 in a given calendar year. Employers also must match this tax. For employees who earn more than $200,000 per year, you’ll need to withhold an Additional Medicare Tax of 0.9%, which brings the total employee Medicare withholding above $200,000 to 2.35%. Employers are not responsible for paying the Additional Medicare Tax.
- Pay FUTA unemployment taxes, which is 6% of the first $7,000 of each employee’s taxable income. FUTA taxes come with a huge caveat that you will want to know about. You can claim a tax credit of up to 5.4% for the state unemployment tax you pay, as long as you pay in full and on time. It’s an easy way to save a whopping 90%, so make sure you take advantage! Only you as the employer are responsible for paying FUTA taxes, so you don’t need to withhold FUTA from your employees’ paychecks.
- Subtract any post-tax deductions. Most of your employees won’t have any post-tax deductions, but you might need to withhold things like court-ordered wage garnishments, child support, etc. Make sure you take these into consideration as well.
Maine state payroll taxes for 2023
Now that we’re done with federal taxes, let’s look at Maine’s state income taxes. Maine charges a progressive income tax, broken down into three tax brackets. The tax rates range from 5.8% on the low end to 7.15% on the high end.
Maine does not have any local city taxes, so all of your employees will pay only the state income tax.
Maine state unemployment insurance (SUI)
As an employer in Maine, you have to pay unemployment insurance to the state. The rate ranges from .0% to 5.4% on the first $12,000 in wages paid to each employee in a calendar year.
If you’re a new employer (congratulations!), you pay a flat rate of 2.45%.
Cut Those Paychecks!
There you have it. Nightmare over. You’ve checked it off your to-do list so you can move onto the important things. Once each employee’s net pay is calculated (after taking deductions and withholdings into consideration), you’re in the clear.
All you have to worry about is getting your employees paid on time as well as setting aside whatever you owe in FICA and unemployment taxes. Those numbers can add up quickly!
You will need to use Form 941 to file federal taxes quarterly, and Form 940 to report your annual FUTA tax. You can pay taxes online using the EFTPS payment system. More information about employment tax due dates can be found here.
Do you have employees nearby too? These might be helpful.
Additional Maine payroll tax resources:
If you would like to learn more, here are some helpful links that can help you become a payroll whiz!
Maine Department of Labor (207) 623-7900 | Unemployment Tax Information | Employers FAQs | Register a New Business
Maine Revenue Services (207) 626-8475 | Employer Withholdings | Withholding FAQs
More helpful payroll calculators for Maine employers
Employers in Maine can use the calculator at the top of this page to quickly calculate their employees’ gross pay, net pay, and deductions in a few clicks. However, employers sometimes have to do a little more math when cutting paychecks. For example, do you occasionally reward top-performing employees in your organization with bonuses? In the eyes of the IRS, these payments are considered supplemental wages and require taxes to be withheld. Also, if you have workers who occasionally move on, every so often you may need to spend time figuring out their final paychecks. So, if you could use a little more help navigating the numbers, check out some of the calculators listed below.