September 2026 Compliance Updates: New State Taxes, Federal Updates, & More

Year-End Reminders

Year-end is quickly approaching! We wanted to provide some reminders:

• State Unemployment agencies will begin to issue employers new assigned rates for the 2027 tax year – Please provide this information to ProLiant as soon as it is received.
• Overtime tracker for qualified overtime
• Tipped Employee TTOC codes assigned for W-2 reporting
  
  

New Taxes

Maryland – Paid Family Leave

Tax Alert has been sent out to impacted employers based on having the active MD SUI tax code on the account. If you have not received this Tax Alert, and believe you should have please reach out to your Account Manager.

Contributions will begin January 1, 2027, with benefits to begin January 1, 2028.

Employers can begin registration through the agency portal in Fall of 2026. Employers with at least one employee in Maryland are required to register. When you register, you’ll enter your federal Employer Identification Number (EIN). All sub-agencies and divisions with the same EIN will be registered together. FAMLI allows only one registration per EIN. After registration, you can grant access to a Third-Party Agent (TPA) so they can interact with FAMLI on your behalf. Only an Authorized Officer can sign the Power of Attorney to grant this access. Registered employers will automatically be enrolled in the State Plan.

If an employer is using a private plan, it will need to be authorized by the agency. Employers with a private plan will still be required to submit wage and hour reports and claims data every quarter. You’ll also be required to keep the following records for at least 5 years:

• Applications submitted and outcomes (approved/denied)
• Benefits paid
• Reconsideration requests and outcomes
• Wage and hour reports
• Employee contributions received

Employers are required to notify their employees of this tax throughout their employment. Employers need to provide notice to employees beginning in July 2027, six months before benefits become available, when an employee is hired, once per year on annual notice, when an employee requests leave, or when the employer knows the employee is taking leave for a qualifying reason. The FAMLI agency will create sample notices for employers to use.

MD FAMLI will be funded through contributions from both employers and employees. Contribution amounts vary based on employer size. The contribution rate is 0.9%, split equally between employers and employees (0.45% each). This rate will apply to wages paid from January 1, 2027 through December 31, 2027. Wages will be capped following the Social Security wage cap for each employee.

• Small employers: (those with fewer than 15 total employees, counting both Maryland and out-of-state employees) are only responsible for remitting 50% of the contribution rate and may withhold that amount fully from employee pay.
• Paying the full contribution: Employers can choose to pay the full contribution amount on behalf of their employees, but there may be tax implications. Employers should consult with their business tax professional before making this decision.

The FAMLI Division will determine employer size based on the total number of employees, including those working inside and outside of Maryland. All employees falling under the same federal Employer Identification Number (EIN) are counted toward a single employer size. Independent contractors will not count toward employer size. Even employers with just one employee in Maryland must comply with FAMLI requirements.

• During 2027: The Division will calculate employer size each quarter based on quarterly wage and hour reports. If your quarterly total number of employees is below 15, you will qualify for the lower rate that quarter.
• Starting in 2028: The Division will average the total number of employees across the previous 4 quarters to determine employer size. If your 4-quarter average is below 15, you will qualify for the lower rate for the entire following year.

Paid Family and Medical Leave

State Updates

Washington – Paid Family & Medical Leave

September 30, 2026 WA Paid Leave will calculate your 2027 business size by averaging your employee headcount from your previous four quarterly wage reports. If calculations show that the business size has changed, the agency will send a letter in late October.

For the most accurate calculation, make sure you have submitted a report for every quarter (2025 Q3 and Q4, and 2026 Q1 and Q2). For each quarterly reporting period, including quarters where you had no payroll, your account should show a status of “Processed.”

The premium rate will be recalculated September 30^th and released to employers in October.