Massachusetts State Income Tax Withholding

Reference Number: NFC-23-1684929273
Published: May 23, 2023
Effective: Pay Period 07, 2023

Summary

The income tax withholding formula for the State of Massachusetts added a 4-percent surtax to employees whose annual taxable income exceeds $1 million dollars.

No action on the part of the employee or the personnel office is necessary.

Tax Formula

State Abbreviation:

MA

State Tax Withholding State Code:

25

Acceptable Exemption Form:

M-4

Basis for Withholding:

State exemptions

Acceptable Exemption Data:

0/A/B/C, Number of Exemptions

TSP Deferred:

Yes

Special Coding:

Determine the Total Number of Allowances field as follows:
First Position - Refer to the blocks under Item 5 on the M-4.
Enter 0 (zero) if no blocks have been checked.
Enter A if Block A has been checked (Head of Household).
Enter B if Block B or C has been checked (employee or spouse is blind).
Enter C if Block B and C have been checked (employee and spouse are blind).

Note: Enter 0NL if Block D has been checked. No tax will be withheld due to limited earnings.

Second and Third Positions - Enter the total number of exemptions claimed on Line 4 of the M-4. If less than 10, precede with a 0 (zero).

Additional Information:

In the event that the employee does not file a State withholding exemption certificate, then zero exemptions (0) will be used as the basis for withholding.

Withholding Formula (Effective Pay Period 07, 2023)

  1. Subtract the nontaxable biweekly Thrift Savings Plan contribution from the gross biweekly wages.
  2. Subtract the nontaxable biweekly Federal Employees Health Benefits Plan payment(s) (includes dental and vision insurance program and Flexible Spending Account — health care and dependent care deductions) from the amount computed in step 1.
  3. Add the taxable biweekly fringe benefits (e.g., taxable life insurance) to the amount computed in step 2 to obtain the adjusted gross biweekly wages.
  4. Multiply the adjusted gross biweekly wages by the number of pay dates in the tax year to obtain the gross annual wages.

    Note: If the employee claims one or more exemptions while making less than $8,000 annually, do not withhold any tax.

  5. Determine the employee’s current retirement deduction amount using the following guidelines:
    1. Multiply the Old-Age, Survivors, and Disability Insurance (OASDI) wages year-to-date (not including current wages) by the employee’s FICA rate to obtain the previous year-to-date FICA contribution.
    2. Add the previous year-to-date FICA contribution computed in step 5a to the employee’s year-to-date contribution to all other retirement systems to obtain the previous year-to-date retirement contribution. 

Note: If this amount is greater than or equal to $2,000, the current retirement deduction amount is zero. Omit steps 5c through 5e and proceed to step 6.

  1. Multiply the current State taxable wages by the employee’s FICA rate to obtain the current FICA contribution.
  2. Add the current FICA contribution computed in step 5c to the employee’s current contribution to all other retirement systems to obtain the current retirement contribution.
  3. Add the previous year-to-date retirement contribution computed in step 5b to the current retirement contribution computed in step 5d to obtain the new year-to-date retirement contribution.

Note: If this amount is greater than $2,000, the current net retirement deduction amount is $2,000 minus the previous year-to-date retirement contribution (e.g., $2,000 minus the amount computed in step 5b), OR
If this amount is less than or equal to $2,000, the current net retirement deduction amount is equal to the current retirement contribution computed in step 5d.

  1. Subtract the current net retirement deduction amount computed in step 5, if applicable, from the current adjusted gross biweekly wages computed in step 3 to obtain the current adjusted gross biweekly wages.

Note: If the employee’s current net retirement deduction amount computed in step 5 is zero, the current adjusted gross biweekly wages is the amount computed in step 3.

  1. Multiply the current adjusted gross biweekly wages by the number of pay dates in the tax year to obtain the current adjusted gross annual wages.
  2. Subtract the following amounts, as applicable, from the current adjusted gross annual wages computed in step 7:
    1. If the employee claims one exemption only, deduct $4,400 or, OR 
    2. If the employee claims more than one exemption, deduct $1,000 times the number of exemptions plus $3,400.
  3. Calculate the annual tax based on annualized taxable wages using the following:

Taxable Wages

If the Amount of Taxable Income Is:

The Amount of Tax Withholding
Over $0 but not over $1,000,000.00 5.00%
Over $1,000,000.00 $50,000.00 plus 9.00% of excess over $1,000,000.00 
  1. Subtract the following tax credits, as applicable, from the annual Massachusetts tax withholding computed in step 9:
    1. If the employee claims Head of Household, deduct $120.00.
    2. If the employee and/or spouse is blind, deduct $110.00 for each blind exemption.
  2. Divide the annual Massachusetts tax withholding by the number of pay dates in the tax year to obtain the biweekly Massachusetts tax withholding.

Resources

To view the updated tax formula, go to the HR and Payroll Clients page from the MyNFC drop-down menu on the National Finance Center (NFC) homepage. Select the Publications tab and select U.S. Income Tax Formulas from the Publications menu to launch the tax map. Select the desired State from the map provided for the formula.

Previous Tax Bulletin

Inquiries

For questions about NFC processing, authorized Servicing Personnel Office representatives should contact the NFC Contact Center at 1-855-NFC-4GOV (1-855-632-4468) or via the customer service portal at ServiceNow Portal for Federated Users and at ServiceNow Portal for Non-Federated Users.