Employer's Guide to Unemployment Insurance Tax in Maryland

Everything employers need to know about paying unemployment insurance taxes in Maryland.

If your small business has employees working in Maryland, you’ll need to pay Maryland unemployment insurance (UI) tax. The UI tax funds unemployment compensation programs for eligible employees. In Maryland, state UI tax is just one of several taxes that employers must pay.

Different states have different rules and rates for UI taxes. Here are the basic rules on Maryland’s UI tax.

Register With the Department of Labor, Licensing and Regulation

As an employer, you will need to establish a Maryland UI tax account with the Maryland Department of Labor, Licensing and Regulation (DLLR). You set up your account by registering your business with the Comptroller of Maryland using Form CRA, Combined Registration Application. You should register within 20 days of starting business. Once registered, you’ll receive a CR number from the state, which is a number used by Maryland to identify your business as an employer for tax purposes.

You can submit Form CRA online, by regular mail, or by fax. If you register online through Maryland’s bFile system, you’ll receive a confirmation number immediately and your account information will be mailed to you quickly. If you prefer to register on paper, you can download a copy of Form CRA from the business tax forms section of the Comptroller website. The downloadable version includes complete instructions including how to submit by fax or regular mail. There is no fee to register your business with the Comptroller.

Note: To establish your Maryland UI tax account, you’ll need a federal employer identification number (EIN). You can apply for an EIN at IRS.gov. Generally, if you apply online, you will receive your EIN immediately.

Rules for UI Tax Liability

Unlike other states, Maryland law does not clearly indicate a minimum amount of wages that must be paid for an employer to be liable for UI tax. Instead, the DLLR appears to assume typical employers will be liable if they have an employee. Under the Federal Unemployment Tax Act (FUTA), typical for-profit employers generally are liable for federal UI taxes if, during the current or preceding calendar year, they either:

  • paid wages of $1,500 or more in any calendar quarter, or
  • had one or more employees at any time in each of twenty calendar weeks.

Different rules, not covered here, apply to agricultural workers, domestic (in-home) workers, and employees of some (but not all) non-profit organizations.

Wage Base and Tax Rates

In recent years, Maryland has required UI taxes on the first $8,500 of each employee’s wages. However, that amount, known as the taxable wage base, could change.

The UI tax rate for new employers is also subject to change. Recently, the new employer rate has been 2.6%. Established employers are subject to a lower or higher rate based on “experience.” This means, among other things, whether your business has ever had any employees who made claims for state unemployment benefits.

One piece of good news is that state UI tax payments generally can be credited against your FUTA taxes.

File Scheduled UI Tax Reports and Payments

In Maryland, UI tax reports (also known as returns) are due by the end of the month following the end of the quarter. Payments are due with the reports. In other words, UI tax due dates are as follows:

Quarter Ending Date

Due Date

March 31

April 30

June 30

July 31

September 30

October 31

December 31

January 31

If the due date falls on a Saturday, Sunday, or state holiday, the due date is extended to the next business day.

In the past, you could submit your quarterly Form DLLR/DUI 15, Contribution Return, and Form DLLR/DUI 16,Employment Wage Report, on paper. However, as of 2016, you must file Maryland UI tax reports electronically. (You also have the option to use a third party payroll service.) The DLLR encourages you to use its WebTax Application via the internet. However, the DLLR also has an E-Wage Reporting system that allows you to submit quarterly wage information, but not contribution returns, by email. The DLLR will no longer mails paper Quarterly Contribution Reports to employers.

If you file using WebTax, you can make payments in any of the following ways:

  • by E-Check (free) at the time of the filing, through the application
  • by credit card (the greater of $1.00 or 2.5% of the tax due) at the time of the filing, through the application
  • by paper check mailed to P.O. Box 17291, Baltimore, MD 21297-0365
  • by E-Check (free) after the time of the filing, directly at the provider’s site at Official Payments’ E-Check web site
  • by credit card (the greater of $1.00 or 2.5% of the tax due) after the time of the filing, directly at the provider's site at Official Payments’ Credit Card Web site, or
  • by ACH Credit after obtaining approval from DLLR by using the Electronic Funds Transfer Guide.

The Contribution and Employment Report must be filed each quarter even if no wages are paid in a quarter. The filing requirement only ends when the Division of Unemployment Insurance issues a letter to you that verifies that your unemployment insurance account is closed.

Post a Notice (Poster)

You are required to post a notice (poster) regarding state unemployment insurance in a conspicuous place for all employees. The poster provides basic information about how employees can file a claim for unemployment insurance benefits, including which employees are eligible and who to contact. You can download a poster that meets the legal requirements (Form DLLR/OUI 238, Employees Rights Under Maryland’s Unemployment Insurance Law) from the employment related posters section of the DLLR website.

Do Not Misclassify Employees as Independent Contractors

Employers who use independent contractors rather than hiring employees are not subject to the UI tax. However, it’s important that you do not misclassify an employee as an independent contractor. If you do misclassify an employee, you could be subject to penalties or fines.

Using Payroll Service Companies

You may decide that it’s easiest to hand over responsibility for payroll, including UI taxes, to an outside payroll service. If so, keep in mind that your business, or even you personally, may still be held directly responsible for mistakes made by an outside payroll company.

Additional Information

This article touches on only the most basic elements of Maryland UI taxes. Avoid possible penalties for making mistakes by checking both the IRS and DLLR websites for the latest information. The DLLR also has an Employer’s Quick Reference Guide available for download from its Forms and Publications section. In addition to state UI tax, employers have other responsibilities not covered in this article such as federal UI tax, state and federal withholding taxes, and required reporting of new hires. You also can get more information about other small business tax issues in other articles on Nolo.com.

Talk to a Tax Attorney

Need a lawyer? Start here.

How it Works

  1. Briefly tell us about your case
  2. Provide your contact information
  3. Choose attorneys to contact you
NEED PROFESSIONAL HELP ?

Talk to a Tax attorney.

How It Works

  1. Briefly tell us about your case
  2. Provide your contact information
  3. Choose attorneys to contact you