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Home / Press Room / Important Year-End Tax & Wage Updates for 2025

2025 Form W-2

As year-end is quickly approaching, this is a reminder that your employees can received their W2s electronically from anywhere they have secured internet access. We encourage employees to sign up and opt in using the MyPay portal.

To opt-in point internet browser to the following url:  www.Doculivery.com/MyPay

For those clients that have opted-in to electronic W-2’s, employees who have opted in will have access to their form W-2 in mid-January.

Paper W-2’s will be mailed on January 31, 2026, for those who have not opted in or if electronic option is unavailable. W2 reprints will be available beginning February 2, 2026.

27 Pay Periods in 2026

There will be 27 bi-weekly (if the first check falls on January 2) pay periods in 2026, instead of the normal 26. Planning for this rare occurrence is necessary. Employers will need to decide if they will reduce salaried employees’ pay for each pay period within the year or if they will allow for the extra paycheck in 2026.

It is critical to consider all factors before making this decision. If a salary reduction is considered, there cannot be a contract in place that guarantees a certain amount on a weekly or biweekly basis. Also important to review are the state and federal requirements. The reduced pay must not go below the minimum required by state or federal law. In addition, states have laws and regulations for how these changes need to be communicated to employees. Finally, benefit deductions based on a percentage of gross will be affected as well.

If you have any employees affected by this, please be sure to connect with your TRICOM Payroll Specialist to coordinate any necessary changes.

One Big Beautiful Bill Act (OBBBA)

On July 4, 2025, Public Law 119-21, known as the One Big Beautiful Bill Act (OBBBA) was signed into law. Included in the OBBBA, are new and enhanced tax deductions, many of which are available from the beginning of 2025. Some of these tax deductions include:

  • Deduction for overtime income – Up to $12,500 ($25,000 for joint filers) in qualified overtime compensation that exceeds the regular rate of pay will be reported on Form W-2 for tax years 2025-2028 for purposes of obtaining a tax credit on annual tax return.
  • Deduction on tax return for tips – Effective 2025 through 2028, qualified tips1 with a maximum annual deduction of $25,000. Tips qualifying for the income tax deduction will still be subject to tax reporting and payroll taxes.
  • Enhanced deduction for seniors
  • Increase in the standard deduction and the child tax credit
  • Increase in the limit on the itemized deduction for state and local taxes

1Qualified tips are tips received in occupations that are listed by the IRS as customarily and regularly receiving tips on or before December 31, 2024, and that are reported on a W-2, 1099, or other specific statement.

2026 Form W-4, Employee's Withholding Certificate

The IRS released a draft version of the 2026 Form W-4 to accommodate change due to the One Big Beautiful Act (OBBBA). Anticipated changed include Step 3: Claim Dependent and Other Credits, Step 4: Other Adjustments, Deductions Worksheet, and an Exempt checkbox has been added for employees who wish to claim exempt from withholding. Once the final document has been released, it will be available on TRICOM’s website under http://tricom.com/resources/tax-tools.

Annual Standard Deduction Amounts

Employee Filing Status

2026

2025

Married, filing jointly or qualified widow(er)

$32,200.00

$31,500.00

Married, filing separately

$16,100.00

$15,750.00

Head of Household

$24,150.00

$23,625.00

Single

$16,100.00

$15,750.00

Earned Income Tax Credit Notice Information

For 2025, you are encouraged to notify the following employees that they may be able to claim EIC on their 2025 tax returns.

EIC Chart (2025 Income Limits)

Filing Status

No
Children

1 Child

2
Children

3 or More
Children

Single/ Head of Household

$19,104

$50,434

$57,310

$61,555

Married Filing Jointly

$26,214

$57,554

$64,430

$68,675

Maximum EITC ranges from $649 (no children) up to $8,046 (with three or more children)

There are eight state that require employers to provide some additional notification to their employees about their possible eligibility for Earned Income Tax Credit. The following states allow employers to use Federal Notice 797:

  • California
  • Illinois
  • Louisiana
  • Texas

The following states require the use of a state-specified form:

  • New Jersey 
  • Virginia
  • Maryland
  • Oregon
  •   Colorado

Once these documents are updated for the current year, they will be available on TRICOM’s website under:  http://tricom.com/resources/tax-tools. Please contact your TRICOM Accounting representatives if you have any questions.

Social Security Wage Base and Tax Rate

2026
Wage Base

2025
Wage Base

Social Security Employee Share

$184,500.00

$176,100.00

Social Security Employer Share

$184,500.00

$176,100.00

Maximum Employee Share (6.2%)

$11,439.00

$10,918.20

Maximum Employer Share (6.2%)

$11,439.00

$10,918.20

The Medicare rate for 2026 remains unchanged at 1.45% for both employees and employers on all income.  Also unchanged is the .9% Additional Employee Medicare Tax on wages earned over $200,000.00.

FUTA Credit Reduction States

For 2025, a FUTA credit reduction applies to two jurisdictions (California and the Virgin Islands) because they failed to repay their outstanding federal loan balance by November 10th.  https://oui.doleta.gov/unemploy/futa_credit.asp

State 2025 FUTA
Credit		 2025 2.7
Add On		 Net 2025 FUTA Rate
(.6% + credit reduction)		 Employer
Surtax?
California 1.20% 0.00% 1.80% No
US Virgin Islands 4.50% 0.00% 5.10% Yes
($25/ee)

COLA Increases for Dollar Limitation on Benefits and Contributions

IRAs 2026 2025
IRA Contribution Limit 7,500.00 7,000.00
IRA Catch-Up Contributions 1,100.00 1,000.00
SIMPLE Plans 2026 2025
SIMPLE Maximum Contributions 17,000.00 16,500.00
SIMPLE Catch-up Contributions 4,000.00 3,500.00
401(k), 403(b), Profit Sharing Plans, etc. 2026 2025
Annual Compensation 360,000.00 350,000.00
Elective Deferrals 24,500.00 23,500.00
Regular Catch-Up Contributions 8,000.00 7,500.00
Catch-Up Contributions -SECURE 2.0 (Employees aged 60, 61, 62, and 63) 11,250.00 11,250.00
FICA Wage Threshold (Roth Catch-up Requirement) 150,000.00 145,000.00
Defined Contribution Limits 72,000.00 70,000.00
ESOP Limits 1,455,000.00
290,000.00		 1,415,000.00
280,000.00
Other 2026 2025
Highly Compensated Employee Threshold 160,000.00 160,000.00
Defined Benefit Limits 290,000.00 280,000.00
Key Employee 235,000.00 230,000.00

Secure Act 2.0 Requirements – Roth Catch-Up Contributions for High Earners

Effective January 1, 2026, the Secure Act 2.0 mandates that employees with prior year FICA wages of $145,000 or higher, must make catch-up contributions to a Roth account on an after-tax basis rather than to a traditional 401(k) account. 

Employees aged 50-59, 64 and up will be eligible to enroll for the regular catch-up amount of $7,500.  

Employees aged 60-63 are eligible to enroll in the Super Catch-Up Plan with an amount of $11,250.00.

Minimum Wage Increases Effective 1/1/26

State Rate
Arizona* $15.15
California* $16.90
Colorado* $15.16
Connecticut $16.94
Hawaii $16.00
Maine* $15.10
Maryland* Local jurisdiction rate changes only -
Michigan $13.73
Minnesota* $11.41
Missouri $15.00
Montana $10.85
Nebraska $15.00
New Jersey - (Six or more employees) $15.92
New Jersey- (Fewer than six employees/seasonal employers) $15.23
New Mexico* Local jurisdiction rate changes only -
New York* $16.00
Ohio $11.00
Rhode Island $16.00
South Dakota $11.85
Vermont $14.42
Virginia $12.77
Washington* $17.13

*Indicates jurisdictions within the state have rate changes to observe.  See below.
Announced rates as of 11/1/25

Local Jurisdiction Rate
Arizona
Flagstaff $18.35
Tucson $15.45
California
Belmont $18.95
Burlingame $17.86
Cupertino TBD
Daly City TBD
East Palo Alto $17.90
El Cerrito $18.82
Foster City $17.85
Half Moon Bay $17.91
Hayward - 26 or more employees $17.79
Hayward - 25 or fewer employees $16.90
Los Altos $18.70
Menlo Park $17.55
Mountain View $19.70
Novato - 100 or more employees $17.73
Novato - 26-99 employees $17.46
Novato - 25 or fewer employees $16.90
Oakland TBD
Palo Alto $18.70
Petaluma $18.31
Redwood City $18.65
Richmond - If employer pays less than $1.50/hr toward medical benefits $19.18
Richmond - If employer pays at least $1.50/hr toward medical benefits $17.68
San Carlos $17.75
San Diego $17.75
San Jose $18.45
San Mateo $18.60
San Mateo County (Unicorporated areas only) $17.95
Santa Clara $18.70
Santa Rosa $18.21
Sonoma TBD
South San Francisco $18.15
Sunnyvale $19.50
West Hollywood (Non-hotel workers) $20.25
Colorado
Boulder $16.82
Boulder County (Unicorporated areas only) $17.99
Denver $19.29
Edgewater $18.17
Maine
Portland TBD
Rockland $16.00
Maryland
Howard County (Fewer than 15 employees) $15.50
Minnesota
Minneapolis $16.37
St Paul (101 or more employees) $16.37
New Mexico
Las Cruces $13.01
New York
NYC, Long Island, Westchester County $17.00
Washington
Bellingham $19.13
Everett (15-499 employees or fewer than 15 employees with more than $2 million in gross revenue) $18.77
King County (Unicorporated areas only) 16-499 employees $19.82
King County (Unicorporated areas only) $19.82
15 or fewer employees and annual gross rev of $2 million or greater
King County (Unicorporated areas only) $18.32
15 or fewer employees and annual gross revenue of less than $2 million
Renton (15-500 employees worldwide) $21.57
Renton (1-14 employees with over $2 million of annual gross revenue in Renton) $20.57
Seattle $21.30
SeaTac (Hospitality and transportation employees) $20.74
Tukwila $21.65
Announced rates as of 11/1/25

State Unemployment Taxable Wage Bases Effective 1/1/26

As of 10/27/25

STATE 2026

WAGE BASE		 2025

WAGE BASE		 STATE 2026

WAGE BASE		 2025

WAGE BASE
Alabama 8000.00 8000.00 Nebraska 9,000.002 9,000.00
Alaska TBD 51,700.00 Nevada 43,700.00 41,800.00
Arizona 8,000.00 8,000.00 New Hampshire 14,000.00 14,000.00
Arkansas TBD 7,000.00 New Jersey 44,800.00 43,300.00
California 7,000.00 7,000.00 New Mexico TBD 33,200.00
Colorado 30,600.00 27,200.00 New York 13,000.00 12,800.00
Connecticut 27,000.00 26,100.00 North Carolina TBD 32,600.00
Delaware 14,500.00 12,500.00 North Dakota TBD 45,100.00
District of Columbia 9,000.00 9,000.00 Ohio 9,000.00 9,000.00
Florida 7,000.00 7,000.00 Oklahoma 25,000.00 28,200.00
Georgia 9,500.00 9,500.00 Oregon TBD 54,300.00
Hawaii TBD 62,000.00 Pennsylvania 10,000.00 10,000.00
Idaho TBD 55,300.00 Puerto Rico 7,000.00 7,000.00
Illinois TBD 13,916.00 Rhode Island (Tier 1) TBD 29,800.00
Indiana 9,500.00 9,500.00 Rhode Island (Tier 2) TBD 31,800.00
Iowa 20,400.00 39,500.00 South Carolina 14,000.00 14,000.00
Kansas 15,100.00 14,000.00 South Dakota 15,000.00 15,000.00
Kentucky 12,000.00 11,700.00 Tennessee TBD 7,000.00
Louisiana 7,000.00 7,700.00 Texas 9,000.00 9,000.00
Maine 12,000.00 12,000.00 Utah TBD 48,900.00
Maryland 8,500.00 8,500.00 Vermont 15,400.00 14,800.00
Massachusetts 15,000.00 15,000.00 Virgin Islands 31,100.00 31,100.00
Michigan TBD 9,500 1 Virginia 8,000.00 8,000.00
Minnesota TBD 43,000.00 Washington 78,200.00 72,800.00
Mississippi 14,000.00 14,000.00 West Virginia 9,500.00 9,500.00
Missouri TBD 9,500.00 Wisconsin 14,000.00 14,000.00
Montana TBD 45,100.00 Wyoming 33,800.00 32,400.00

Wage Bases changed for 2026 are highlighted in bold - TBD will be posted to TRICOM's website after the first of the year.

1 Michigan - $9500 for contributing employers that are delinquent on UI payments
2 Nebraska - $24,000 for employers in the highest UI tax group (category 20)

State Disability Insurance and Paid Family Leave

The following chart contains the 2026 contribution and taxable wage rates for states that have state disability or paid family leave programs.

State Date Benefits can be Received Who
Contributes		 Contribution
Rate		 Benefit Categories
SDI=State Disability Insurance
PFL=Paid Family Leave		 Employer/Employee 2026 Taxable Wage
Base
California Employee 1.30% SDI 1.30% Employee None
Colorado Employer/Employee* 0.88% PFL .88% Employer;
Employer responsible for full .88% but can deduct half from employee (.44% Employee)		 184,500
Connecticut Employee 0.50% PFL .50% Employee 184,500
Delaware 1/1/2026 Employer w/10 or more employees 25 or more employees = 0.8%
(.32% parental leave,
.4% medical leave, .08% family care giver leave)
10-24 employees = .32%
(parental leave only)		 PFL Employer, Employees may contribute up to 50% of the contribution (.4% for employees of employers with 25 or more employees)
(.16% for employees of employers 10-24);		 184,500
District of Columbia Employer 0.75% PFL 0.75% Employer None
Hawaii 1/1/2026 Employers are required to have coverage 0.5% of weekly wage with max of $7.21 for 2025 SDI Employers may deduct 1/2 of premium cost but no more than .50% of employee weekly wage up to max limit of $7.21 $1,441.72 maximum of weekly wage base
Maine 5/1/2026 Employer, Employee (if employer elects to split contribution) >15 employees: 1%
<14 employees: 0.5%		 PFL >15 employees: 1% for employers (may deduct 0.5% from employees)<14 employees: 0.5% for employers (may deduct 0.5% from employees) 184,500
Maryland
Postponed to 1/1/27
Massachusetts Employer/Employee** 0.88% PFL 0.42% for employers, 0.46% for employees 184,500
Minnesota 1/1/2026 Employer/Employee 0.88% PFL 0.44% for employers (Employers with 30 or fewer employees .22%) 0.44% for employees 184,500
New Jersey Employer/Employee 0.29%-0.94% TDI (SDI) Employer: 0.5% for new employers (0.1%-0.75% for other employers)
Employee: 0.19%		 $44,800 employer wage base
$171,100 employee wage base
New Jersey Employee 0.23% FLI (PFL) 0.23% for employees $171,100.00
New York Employer/Employee 0.5% (weekly) + additional costs beyond employee contributions SDI Employer: additional cost beyond employee contributions
Employee: 0.5% weekly - maximum: $0.60 per week		 $120 weekly
New York Employee 0.432% PFL 0.432% $95,348.76 (annualized equivalent of state average weekly wage of wage $1,833.63 for 2026)
Oregon Employee/Employer** 1.00% PFL Employees: 0.6%
Employers: 0.4%
(Employers with <25 employees are not required to pay employer portion)		 184,500
Puerto Rico Employer/Employee 0.60% SDI 0.3% employer, 0.3% employee $9,000
Rhode Island Employee 1.30% SDI 1.3% for employee $89,200
Washington Employer/Employee 1.13% PFL Employees: 71.43%
Employers: 28.57%
(Employers with <50 employees are not required to pay employer portion)		 184,500

* small employers (fewer than 10 employees) are exempt from employer contributions but must withhold and remit employee contribution and fulfill reporting obligations

** small employers (fewer than 25 employees) are exempt from employer contributions but must withhold and remit employee contribution and fulfill reporting obligations

2026 Social Security Limit is $184,500

Each program has its own leave requirements and length of time to receive benefits

Go to specific state for more details

Contribution rate or wage base has yet to be announced

State Sick Leave Law Specifications

State
Required		 Eligible Employers Accrual Rate Annual Accrual
Cap		 Separate Local
Jurisdiction Rules*
Alaska Employers with at least 1 covered employee working in the state 1 hour / 30 worked 40 hours (employers with 14 or less employees)

56 hours (employers with15 or more employees)		 -
Arizona All employers 1 hour / 30 worked 24 hours (employers with 14 or less employees)

40 hours (employers with 15 or more employees)		 -
California All employers 1 hour / 30 worked 80 hours (and a usage cap of 40 hours) Berkeley, Emeryville, Los Angeles, Oakland, San Diego, San Francisco, Santa Monica, West Hollywood
Colorado All employers 1 hour / 30 worked 48 hours -
Connecticut Employers with 25 or more employees

(11 or more employees beginning January 1, 2026; 1 or more employees beginning January 1, 2027)		 1 hour / 30 worked 40 hours -
District of Columbia All employers 1 hour / 43 worked




1 hour / 87 worked




1 hour / 43 worked




1 hour / 37 worked		 40 hours (Restaurant & Bar Employees in DC who receive tips)

24 hours (employers with 24 or less employees in DC)

40 hours (employers with 25-99 employees in DC)

56 hours (employers with 100 or more employees in DC)		 -
Illinois All employers (does not apply to employers covered by Chicago or Cook County Sick leave ordinance) 1 hour / 40 worked 40 hours Chicago, Cook County
Maine Employers with 10+ employees in Maine for more than 120 days in any calendar year 1 hour / 40 worked 40 hours -
Maryland All employers 1 hour / 30 worked 40 Unpaid hours (employers with 14 or less employees)
40 Paid Hours (employers with 15+ employees)		 Montgomery County
Massachusetts All Employers 1 hour / 30 worked 40 Unpaid hours (Employers with 10 or less employees)
40 Paid hours (Employers with 11 or more employees)		 -
Michigan All employers 1 hour / 30 worked 40 hours (employers with 10 or less employees)

72 Hours (employeers with 11 or more employees)		 -
Minnesota All employers with employees who work or are forecasted to work 80 hours annually 1 hour / 30 worked 48 hours Bloomington, Minneapolis, Saint Paul
Nebraska All employers with employees who work at least 80 hours in a year within the state of NE 1 hours / 30 worked 40 hours (employers with 19 or less employees)

56 hours (employers with 20 or more employees)		 -
Nevada Employers with 50 or more employees within state (Temporary employees are excluded) 0.01923 hours / 1 hour worked (equal to 1 hr / 52 hrs worked) 40 hours -
New Jersey All employers 1 hour / 30 worked 40 hours Bloomfield, East Orange, Irvington, Jersey City, Montclair, Newark, Passaic, Patterson, Plainfield, Trenton
New Mexico All employers 1 hour / 30 worked 64 hours Bernalillo County
New York All employers (employer size based on nationwide employee count) 1 hour / 30 worked 40 Unpaid hours (employers with 5 or less employees & net income less than 1 million annually)

40 hours (employers with 5-99 employees)

56 hours (employers with 100 or more employees)		 New York City, Westchester County
Oregon All employers 1 hour / 30 worked 40 Unpaid hours (employers with 9 or less employees)

40 Paid hours (employers with 10 or more employees)		 Portland
Pennsylvania Not State Mandated - - Allegheny County, Philadelphia, Pittsburg
Puerto Rico Employers located in Puerto Rico and covered by FLSA 1 day / month worked (full time)

.5 day / month worked (part time with fewer than 115 hours / month)		 Not specified, but payout upon termination required -
Rhode Island All Employers 1 hour / 35 worked 40 Unpaid hours (employers with 17 or less employees)

40 hours (employers with 18 or more employees)		 -
Vermont All employers 1 hour / 52 worked 40 hours -
Washington All employers 1 hour / 40 worked No cap on amount of accrued PSL employee may accrue/use Sea Tac, Seattle, Tacoma

*Indicates in addition to any applicable state sick leave laws, there are separate local jurisdiction rules that must be implemented if adventageous to employee

For more legislative and year-end updates, please refer to TRICOM.com. We will post the latest legislative and tax updates, as well as tax tools and other resources for 2026 as they become available. For specific questions, please contact Mary Jo Heim in the TRICOM Accounting Department at 262-509-6214 or your TRICOM Accounting Representative.

Tags:

Taxes State Wages

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