Updated November 25, 2025
It’s December already? Yep, and if you find yourself struggling to remember how it is that we got here so quickly, you’re not alone. Every year, it seems that the end comes so fast, and before you know it, you have to remember everything that happened over the past year. This can be an especially trying task when it comes to things like taxes and mandatory reporting for businesses. I mean, there was so much that happened over the past year—payrolls, regulation changes, internal shufflings—that it can be difficult to look back and remember all of the things you need to remember heading into the new year.
This is a problem that many individuals and businesses face. At Payday HCM, our clients and potential clients are constantly approaching us with questions about legislative and regulatory updates and changes that happen throughout the year. There can be a lot to keep track of, and for a business owner who’s often more concerned with the daily operations of said business, it can feel like too much sometimes.
That’s why, in this article, we’ll go over the key regulatory and legislative changes that you need to know when it comes to year-end reporting and filing. The updates that we’ll cover here include:
- 'One Big Beautiful Bill Act' Year-End Changes
- Federal Tax Limits and Filing Mandates
- Affordable Care Act Updates
These changes could have larger impacts on how your business approaches its end-of-the-year filing and reporting. By the end of this article, you’ll have all the information you need to know to take on this year’s end with confidence.
'One Big Beautiful Bill Act' Year-End Changes
First up, we'll start with the biggest change that's likely on most businesses' minds: what changes the "One Big Beautiful Bill Act" has introduced.
OBBBA Tips and Overtime Tax Deductions
Probably the most prominent changes that individuals and businesses will be expecting heading into year-end and the upcoming tax year are the qualified tips and overtime tax deductions. For this year, Forms W-2 and other tax forms will remain unchanged regarding these deductions. Also, since these are deductions, employers and employees shouldn't expect to see any changes directly on any paychecks heading into the new year.
On top of this, the IRS has also designated the upcoming tax year as a transition year, meaning the new reporting requirement for employers won't be enforced—this includes providing employees with accounting statements listing the amounts designated as qualifying tips or overtime compensation. However, the IRS does still recommend employers furnish a statement to employees for this tax season so employees can take full advantage of the deduction.
The tips and overtime tax deductions also include different caps as well as income thresholds, on top of a list of qualifying occupations organized with three-digit codes. For a more detailed breakdown of these deductions, check out our article on what businesses need to know about the OBBBA tips and tax deductions.
Form 1099 Threshold Increase
Two notable changes introduced by the OBBBA that flew slightly more under the radar affect who businesses distribute Form 1099s to. Currently, businesses must issue 1099s to any individuals, businesses, or contractors to whom they made a payment of $600 or more. For 2026, the OBBBA sets the Form 1099 threshold at $2,000—it will then increase year-over-year based on inflation, calculated by the cost-of-living adjustment (COLA).
On top of this, the OBBBA also repealed the de minimis rules for third-party network transactions for tax years after December 31, 2024. This largely affects gig workers who file Form 1099-Ks to report income from side jobs. The OBBBA reverts the reporting requirements back to $20,000 and 200 transactions in one tax year; the requirements were set to reach $600 starting in 2026 after having decreased year-over-year starting in 2021.
Federal Tax Limits and Filing Mandates
Looking ahead, there are some changes to federal tax limits that will impact payroll and reporting. It’s crucial to understand these changes to ensure seamless compliance.
Social Security Wage Base Limit
The Social Security wage base limit has changed slightly in the last year, resulting in a bit of a difference when looking at taxable earnings. For 2026, the new maximum limit is $184,500 compared to $176,100 for 2025.
This doesn’t mean that the actual tax rates for Social Security or Medicare have changed. Those rates are still 12.4 percent combined for Social Security for employers and employees and 2.9 percent combined for employers and employees for Medicare. It just means that the maximum amount of taxable earnings for Social Security is slightly higher.
E-Filing Mandate
Another change businesses can expect to see is in regards to whether they will be filing electronically or by paper. While this change took effect this past tax year, it's still good to note for this upcoming tax year—employers who are filing ten or more returns will be required to file electronically.
This can be slightly confusing for some smaller employers who may not be sure if they qualify. The mandate is for those filing ten or more total returns. This means that if you have five employees but are filing ten different total forms with the IRS, you’ll still be required to file electronically.
Another important note here is deadlines. For certain deadlines (filing Form 1099-MISCs, for example), there are separate deadlines for paper and electronic filings. Employers should take special care to ensure they are following the correct deadlines, depending on whether you are filing on paper or electronically.
Affordable Care Act Updates
Applicable large employers have updated requirements under the Affordable Care Act for the upcoming year. Ensuring compliance with these changes is crucial to avoid penalties.
Changes to Affordability Thresholds
Like last year, applicable large employers will need to take note of changes to the affordability threshold percentage that dictates whether an employer's health coverage is affordable as to remain compliant with the ACA. For 2026, the new ACA affordability threshold is 9.96 percent, up from 9.02 percent for 2025.
This affordability threshold helps the IRS determine whether an ALE’s insurance coverage is affordable under the ACA’s affordability and minimum value guidelines. The percentage refers to a percentage of an employee's income.
Filing Deadlines and Penalties
Applicable large employers want to be sure to file their ACA information, as certain penalties can be incurred. For employers who fail to file the proper forms, the penalty is $270 for each return where the information has failed to be filed. This penalty caps out at $3.275 million. This amount is the same for 2026.
The same penalty amount—$270 for each return where the failure occurs, maxing out at $3.275 million—applies to employers who must correct any filings. The IRS can also issue differing individual penalties to employers who intentionally disregard filing any information.
However, there are certain ACA penalty amount increases for 2026, including penalties for employers who fail to offer minimal essential coverage to 95 percent of full-time employees, or employers who fail to offer minimal essential coverage that is not affordable and minimum value. These penalties are:
- Penalty for employers who fail to offer minimal essential coverage to 95 percent of full-time employees: $3,340 per full-time employee (for 2025: $2,900), minus the 30-employee reduction.
- Penalty for employers who fail to offer minimal essential coverage that is not affordable and minimum value: $5,010 per full-time employee who received Marketplace subsidized coverage (for 2025: $4,350).
Feel Great And Stay Up-To-Date
Another year has come and gone, and another tax filing season is upon us. You know, it’s really starting to seem like every year, businesses and individuals have to file their taxes with the IRS. And every year, the process seems to be extraordinarily complicated and stressful, with all sorts of different changes and updates happening throughout the year that no one can ever remember. Maybe someday, there will come a time when we don’t have to do this every year, but for now, we do. Luckily, with the information provided in this article, it won’t have to be as complicated and stressful.
Of course, these aren’t the only things you’ll need to know heading into the end of the year. Take a look at our article on employer taxes to get a refresher on everything you’ll need to pay heading into next year.
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