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Takeaway
Stay ahead of 2026 HR compliance updates with key changes to tax forms, state tax withholding tables, unemployment insurance, international tax rates and more.
Paycom is committed to helping HR professionals navigate the ever-changing compliance landscape. In this edition of State of Compliance, we look at changes across six states, the federal level and internationally. Please note this list is not intended to be comprehensive. Our team is constantly monitoring for updates that may impact your organization.
Federal HR compliance updates
The Internal Revenue Service (IRS) has issued revised December 2026 instructions for Forms 1099-MISC and 1099-NEC, introducing several reporting updates that affect how tax filers capture and report certain payments. These instructions were issued to keep taxpayers in compliance with the One Big Beautiful Bill Act, which passed in 2025.
To learn more, visit the IRS website.
The IRS released an updated fact sheet on the qualified overtime deduction, specifying that for tax years 2026 and later, the deduction is only allowed for amounts that an employer specifically reports on an employee’s Form W-2. The new guidance, provided in Fact Sheet 2026-13, replaces a set of questions and answers issued in January 2026. The updates clarify the reporting requirements that become mandatory for tax years beginning after Dec. 31, 2025.
For more information, visit the IRS website.
The IRS provided updates on reporting Trump Account contributions in the agency’s Aug. 13 payroll industry teleconference.
Employers can report employer-funded contributions and employee salary reduction contributions to Trump Accounts under a Section 125 cafeteria plan on Form W-2, Wage and Tax Statement, in Box 12 using code TA. The form’s instructions state that code TA is used to identify employer contributions to Trump Accounts. However, because both employee salary reduction contributions under cafeteria plans and employer contributions are exempt from income tax, code TA can be used for both types. However, this is an exclusion from gross income, not an exemption, and is still taxable under FICA/FUTA.
Additionally, Section 128 contributions funded through salary reduction cannot be made to the employee’s own Trump Account; they must be made to the account of the employee’s dependent.
These are still only proposed regulations that are still in the comment period and, as such, are not yet finalized.
For more information, visit the U.S. Securities and Exchange Commission website.
State HR compliance updates
Idaho
The Idaho State Tax Commission released revised withholding tables in response to the Idaho Child Tax Credit that expired July 31, 2026. The new tables went into effect the same day.
We have updated withholding amounts in the Paycom software.
For more information, visit the Idaho State Tax Commission website.
Indiana
Indiana Senate Bill 162, effective July 1, 2026, updated the state’s unemployment insurance laws.
The new law:
- affects how vacation and sick leave payments are treated in regard to unemployment benefits
- affects the definition of “employment” in regard to certain organizations
- tightens the definition of “suitable work”
- codifies administrative procedures for claims
- authorizes limited direct deposit disbursements
- addresses disaster unemployment assistance
To learn more, visit the Indiana General Assembly website.
Maine
Maine LD 54 HP 18, a pay transparency law that introduces requirements around disclosure and recordkeeping, became effective July 29, 2026.
Under the new law:
- Employers with 10 or more employees must include a pay range in job postings.
- A “range of pay” may be based on factors such as an established pay scale, previous ranges for the position, current employee pay for similar roles or a budgeted amount.
- Positions compensated solely by commission must instead clearly state that compensation is commission-based.
- Employers must provide the pay range for a position to an employee upon request.
- Employers are also required to maintain records of each employee’s position and pay history throughout employment and for three years after employment ends.
To learn more, visit the Maine Legislature website.
Maine’s 2026 income tax withholding methods were updated to add the state’s surcharge for high earners and increase the standard deductions provided, Maine Revenue Services reported in an Aug. 13 tax alert.
The standard deductions used in the withholding methods increased to $15,700 for single employees or married employees filing separately, $23,550 for head of household and $31,400 for those filing married joint returns. After withholding is calculated using the percentage method, the 2% surcharge is added to the portion of an employee’s annualized income above the thresholds of $750,000 for married individuals filing separately; $1 million for single individuals; or $1.5 million for individuals filing as heads of households, married individuals filing joint returns or individuals filing as surviving spouses. Weekly, biweekly, semimonthly, monthly and daily equivalents of the thresholds are provided in the wage-bracket tables.
Employers should not reduce Maine withholding by any amounts an employee may claim on the deduction worksheets attached to federal Form W-4, Employee’s Withholding Certificate or Form W-4P, Withholding Certificate for Periodic Pension or Annuity Payments.
For more information, visit the Maine Revenue Services website.
Mississippi
Mississippi House Bill 4073 establishes the Mississippi Work and Save Program and took effect July 1, 2026.
This state-sponsored retirement savings initiative:
- allows eligible employees and employers to voluntarily contribute to Roth IRAs via payroll deductions
- updates Mississippi’s public retirement and deferred compensation systems
- places limits on when and how retirees can return to public-sector work
To learn more, visit the Mississippi Legislature website.
Oregon
A new minimum wage went into effect in Oregon July 1, 2026, depending on work location:
- In the Portland metro, the rate is $16.80 per hour.
- The standard minimum wage is $15.55 per hour.
- The nonurban minimum wage is $14.55 per hour.
Visit the State of Oregon Bureau of Labor and Industries website to see the rates for each county. Rates remain in effect through June 30, 2027.
Virginia
A number of Virginia laws took effect July 1, 2026:
- House Bill 1207/Senate Bill 2 establishes a statewide paid family and medical leave insurance program.
- House Bill 238 is a labor and employment law covering worker classification, wage provisions and sentence credits.
- House Bill 636/Senate Bill 215 prohibits employers from requesting or relying on a candidate’s wage or salary history and requires employers to include a good-faith wage or salary range in job postings.
To learn more, visit the Virginia General Assembly website.
For additional insight into emerging legislation, visit Paycom’s U.S. Legal and Compliance resource hub.
International HR compliance updates
As Paycom supports clients with employees around the world, staying aware of international compliance updates is an important part of managing a global workforce. This section highlights recent changes outside the U.S. that may affect payroll, tax obligations and employee-related processes in the countries where organizations operate.
Canada
Updates to Canada’s provincial taxes were applied July 1, 2026. Employees could see a change in some provincial income taxes. Federal income taxes are not affected.
- British Columbia income tax:
- This new tax rate is 5.60% on the first $50,363 of an individual’s income. A prorated rate of 6.14% was applied July 1, 2026, for employees who were taxed at 5.06% for the first six months to reflect the midyear change.
- Income tax brackets were adjusted for 2026:
- 6.14% (prorated) for income under $50,363
- 7.70% for income from $50,363 to $100,728
- 10.50% for income from $100,728 to $115,648
- 12.29% for income from $115,648 to $140,430
- 14.70% for income from $140,430 to $190,405
- 16.80% for income from $190,405 to $265,545
- 20.50% for income of $265,545 and over
- In addition, for 2026 and subsequent years, the basic reduction is increased from $562 to $690. The basic reduction amount was indexed to $575, effective Jan. 1, 2026. Since this amount was used for the first six months of the year, a prorated basic reduction amount of $805 will apply for the remaining six months.
- Newfoundland and Labrador Basic Personal Amount (BPA):
- BPA for 2026 is set at $13,094, effective Jan. 1, 2026. A prorated BPA of $15,000 was applied July 1 for employees who were using the indexed BPA of $11,188 for the first six months to reflect the midyear change.
- If an employee has submitted a TD1NL prior to July 1, 2026, with the lower BPA, employers do not need a new TD1NL to change it to the prorated amount.
- Prince Edward Island income tax:
- This new tax rate is 20% on an individual’s income above $200,000. A prorated rate of 21% was applied July 1, 2026, for employees who were taxed at 19% for the first six months to reflect the midyear change.
- Income tax brackets were adjusted for 2026:
- 9.50% for income under $33,928
- 13.47% for income from $33,928 to $65,820
- 16.60% for income from $65,820 to $106,890
- 17.62% for income from $106,890 to $142,520
- 19% for income from $142,520 to $200,000
- 21% (prorated) for income $200,000 and over
Please note there are no updates for Alberta, Manitoba, New Brunswick, Northwest Territories, Nova Scotia, Nunavut, Ontario, Saskatchewan, Yukon or Quebec.
To see the full breakdown of tax changes, review the Canada Revenue Agency’s released publication.
