Maryland FAMLI for small employers: fewer than 15 employees remit 50% of the rate — and how the count works
Published Sep 19, 2026
Page updated Oct 10, 2026
Short answer, as of October 8, 2026: A small employer is not exempt from FAMLI. An employer with fewer than 15 total employees remits only 50% of the contribution rate. In 2027 that is 0.45% of wages in place of 0.9%. The count includes employees inside and outside Maryland under one federal EIN. Independent contractors do not count.
The rule in the State's words
The Make contributions page says: "Employers with fewer than 15 total employees, counting both Maryland and out-of-state employees are only responsible for remitting 50% of the contribution rate."
The Governor's release of September 1, 2026 calls this a small employer discount. It says: "More than 80% of Maryland employers will qualify for this discount, designed to support Maryland's small businesses."
| Employer size | Remits to the State in 2027 | Employee deduction (maximum) |
|---|---|---|
| 15 or more employees | 0.9% of wages | 0.45% |
| Fewer than 15 employees | 0.45% of wages | 0.45% |
The small employer may withhold the 0.45% from employee pay. The page says: "You may withhold that amount from employee pay". The employer may also pay it for the employees. See the numbers for your payroll in the FAMLI tax calculator.
How the count works
- Count all employees to whom you paid any wages. COMAR 09.42.02.06A counts employees "within and without the State".
- Count all employees under the same federal EIN together.
- Do not count independent contractors.
- Compare the total with 15. Fewer than 15 means 14 or less.
When the State makes the test
| Period | Test | Source |
|---|---|---|
| 2027 | Each quarter, from the Quarterly Wage and Hour Report. Fewer than 15 for the quarter gives the lower rate for that quarter. | Make contributions page |
| From 2028 | The average number of employees in the quarters of the previous calendar year. Below 15 gives the lower rate for the full following year. | Make contributions page; COMAR 09.42.02.06B |
| New employer in a later year | Quarterly test continues until the employer has 4 quarters of reports and contributions in 1 calendar year. | COMAR 09.42.02.06C |
In 2027 the rate can change from one quarter to the next. An employer that is near 15 employees must check the count each quarter.
The reporting trap: the out-of-state count
COMAR 09.42.02.08 says the quarterly report must include the number of employees outside Maryland paid in the quarter. The regulation says: "If the employer fails to provide a number of employees performing employment for the employer outside the State, the employer will be deemed to not be a small employer."
On the report itself this is the "Total employee headcount" field. The State's QWHR file guide (updated July 29, 2026) defines it as "The total number of employees who received wages from the employer during the reporting period", including "both those located in MD and those located elsewhere", and says: "if this field is not filled out, the EIN will not be eligible for the small employer status". The number must be the same on every row for your EIN and at least as large as the number of Maryland employees you report. Fill in the total employee headcount on each report, even when every employee works in Maryland — then the headcount simply equals the number of Maryland employees you report. Leave it blank and you pay the employer half too.
What a small employer must still do
A small employer has the same duties as a large one, except for the employer share.
- Register. The registration page says: "There are no exceptions under state law." See who must register.
- Give written notice at least 1 pay period before the first deduction (COMAR 09.42.02.05D). For a January 2027 start, that is December 2026.
- Deduct from wages paid on or after January 1, 2027.
- File the quarterly report and pay on the same day. The first due date is Apr 30, 2027. The next-business-day rule covers the payment only (Aug 2, 2027 and Nov 1, 2027).
- Give employee notices from July 2027.
A missed deduction costs a small employer the full amount
COMAR 09.42.02.07 says an employer that fails to deduct "is considered to have elected to pay the employee's portion" and "may not recoup" it on future pay cycles. For a small employer that means the employer pays the full 0.45% for that pay cycle. The one exception covers a paycheck with insufficient funds after other required withholdings, within the next 6 pay cycles.
Penalties apply at every size
COMAR 09.42.02.09 gives 30 days to cure a missed payment. Interest is 1.5 percent per month or part of a month. § 8.3-903 allows an extra assessment of up to two times the contributions "withheld". The regulation says "not to exceed two times the contributions delinquent to the Division" (COMAR 09.42.02.09B(2)). See penalties and interest.
Who can help
If you use software, ask the vendor for the public page that says the product withholds Maryland FAMLI. See payroll providers. If you have no software, see payroll by hand. Families with a nanny or home care worker: see household employers.
This is a private website, not a government site. General information, not legal, tax or insurance advice. Official site: paidleave.maryland.gov.
Sources
- Maryland FAMLI — Make contributions (small employer rule) — checked Oct 8, 2026
- COMAR 09.42.02.06 — employer size — checked Oct 8, 2026
- COMAR 09.42.02.08 — quarterly reports (out-of-state employee count) — checked Oct 8, 2026
- Maryland FAMLI — QWHR file guide (updated July 29, 2026) — checked Oct 9, 2026
- Governor's release, September 1, 2026 — small employer discount — checked Oct 8, 2026
- Maryland FAMLI — Understand employer registration — checked Oct 8, 2026
Frequently asked questions
›Are small businesses exempt from Maryland FAMLI?
No. An employer with at least one employee in Maryland must register, report and remit. An employer with fewer than 15 total employees is exempt only from the employer share. It remits 50% of the rate, which is 0.45% of wages in 2027.
›Do out-of-state employees count toward the 15?
Yes. The Make contributions page says the count includes both Maryland and out-of-state employees. All employees under the same federal EIN are counted together. Independent contractors do not count.
›Can a small employer take the 0.45% from employee pay?
Yes. The Make contributions page says of the 50% amount: 'You may withhold that amount from employee pay'. The employer can also pay it for the employees.
›What happens if I go from 14 to 15 employees during 2027?
In 2027 the State calculates employer size each quarter from the quarterly report. An employer with fewer than 15 employees for the quarter gets the lower rate that quarter. With 15 or more, the full 0.9% applies to that quarter.
›How can I lose the small employer rate by mistake?
COMAR 09.42.02.08 says the quarterly report must include the number of employees outside Maryland. An employer that does not give that number will be deemed to not be a small employer.
Private website. Not affiliated with the State of Maryland, the Maryland Department of Labor or the FAMLI Division. Official site: paidleave.maryland.gov. General information with sources and check dates — not legal, tax or insurance advice. We are not a licensed insurance producer; we do not recommend any agent, insurer or plan, and we receive no commission or fee based on any insurance sale.