Compliance Corner
last updated: September 30, 2026
Helpful Links
- State payroll tax registration links
- Federal Forms:
- State W-4s
- Non-Resident Forms: Wisconsin (W-220), Illinois (W-5NR)
Payroll Update: Time Off to Vote
Election Day is approaching, which is a good reminder that voting leave requirements vary by state. While there is no federal requirement for employers to provide time off to vote, many states have their own requirements for voting leave.
The rules can differ on how much time employees may take, whether the time is paid, when it can be taken and whether advance notice is required.
A Few Things to Keep in Mind
- Paid or unpaid? Voting leave may be paid in some states and unpaid in others.
- Who chooses the time? Some states allow the employer to determine when the employee takes the time.
- Advance notice: Employees may be required to notify their employer before Election Day.
- Early voting: Some states specifically address early voting or absentee voting.
Wisconsin
Wisconsin employees may take up to three consecutive hours while the polls are open. The employer may designate when the time is taken, and employees must provide notice before Election Day. Voting leave is unpaid. https://dwd.wisconsin.gov/er/laborstandards/voting.htm
Employer Reminder
Before Election Day, employers should review the voting-leave requirements for each state where they have employees. Be sure to confirm whether leave is paid or unpaid, any advance-notice requirements and whether early or absentee voting affects the employee's need for time away from work.
Bottom line: Don't assume the rules are the same in every state. A quick review of your state requirements and payroll practices can help avoid surprises on Election Day.
One Big Beautiful Bill Act (OBBBA)
Treasury Tipped Occupation Codes in UKG Ready
Tipped Employees? As you prepare for year-end, take a moment to review your tipped employees’ profiles in UKG Ready and make sure the appropriate Treasury Tipped Occupation Code (TTOC) is entered. TTOCs are required for 2026 W-2 reporting.
For 2026, the TTOC will appear on the employee’s Form W-2 in Box 14b. The total amount of cash tips reported to the employer will be reported in Box 12 using Code TP.
You can find the TTOC list on the IRS website.
Qualified Overtime Reporting
The OBBBA created a federal income tax deduction for qualified overtime compensation. Beginning with 2026 W-2s, employers must separately report qualified overtime compensation paid during the year. The amount reported is the overtime premium portion required under the FLSA—not the employee’s entire overtime earnings. For example, for time-and-a-half overtime, the qualified amount is generally the additional “half” portion.
For 2026, qualified overtime will be reported on Form W-2, Box 12 using Code TT. Employees may use this information when determining whether they qualify for the federal overtime deduction.
Payroll reports the qualified overtime amount; it does not determine whether an employee is eligible for the deduction. Employees should consult a qualified tax professional regarding their individual eligibility and tax situation.
Resources:
- IRS – General Instructions for Forms W-2 and W-3
- IRS – Questions and Answers About the New Deduction for Qualified Overtime Compensation
2026 1099 Reporting Threshold
The federal 1099 reporting threshold for certain 1099-NEC and 1099-MISC payments increases from $600 to $2,000 for payments made in 2026, with inflation adjustments beginning in 2027.
States may have different reporting requirements. For example, Wisconsin continues to require reporting of certain nonwage compensation at $600 or more.
Employer Action: Review your 2026 vendor payments and make sure your 1099 process accounts for both federal and applicable state reporting requirements.
Resources:
- IRS – Publication 1099, General Instructions for Certain Information Returns
- IRS – Guide to Information Returns
- Wisconsin Department of Revenue – Forms W-2 and 1099 Filing Requirements
Trump Accounts
Trump Accounts are tax-advantaged savings accounts for eligible children under 18 with a valid Social Security number. Eligible U.S. citizen children born January 1, 2025, through December 31, 2028 may receive a one-time $1,000 federal contribution.
The annual contribution limit is generally $5,000. Employers may contribute up to $2,500 annually for an employee or the employee’s dependent, subject to specific employer plan requirements. A Section 125 plan may allow employees to make payroll-deduction contributions to a dependent’s Trump Account.
Resources:
Pay Data Reporting
Pay Data Reporting: The future of federal EEO reporting is still evolving. The EEOC has proposed ending the annual EEO data reporting requirements, but state and local requirements may continue independently.
Colorado will require certain employers to report EEO-1 data to the Colorado Secretary of State beginning July 1, 2027, even if the federal EEO-1 reporting requirement ends.
California, Illinois, Massachusetts, and New York City also have their own pay or workforce data reporting requirements, so employers should continue to monitor those requirements.
Resources:
- EEOC – EEO Data Collections
- Colorado – Pay Data Reporting Information
- California – Pay Data Reporting
- Illinois – Equal Pay Registration Certificate
- Massachusetts – Workforce Data Reporting FAQs
- New York City – Pay Data Reporting Legislation
SECURE 2.0 Act – Roth Catch-Up Contributions
High-Wage Earner Roth Catch-Up
Starting in 2026, SECURE 2.0 requires certain higher-wage employees who make catch-up contributions to make those catch-up contributions as Roth (after-tax) contributions rather than pre-tax contributions.
For 2026, the requirement applies to catch-up-eligible employees whose 2025 Social Security wages (Form W-2, Box 3) exceeded $150,000 from the employer sponsoring the retirement plan. If the retirement plan offers a Roth option, catch-up contributions for these employees must be Roth.
Employees may also notice a higher catch-up contribution limit in 2026. The regular catch-up limit for most 401(k), 403(b), and governmental 457 plans is $8,000, while employees who turn 60, 61, 62, or 63 during 2026 may be eligible for a higher $11,250 catch-up limit.
We have created a one-page overview explaining how catch-up contributions are handled in UKG Ready, what we are updating, and whether any action is needed. [Click here for the one-page overview.]
Resources:
- IRS – Retirement Topics: Catch-Up Contributions
- IRS – 2026 Retirement Plan Contribution Limits
- IRS – Final Regulations on SECURE 2.0 Catch-Up Contributions
- UKG – SECURE 2.0 Roth Catch-Up Mandate
Maryland FAMLI – Get Ready for 2027
Do you have employees working in Maryland? Maryland’s Family and Medical Leave Insurance (FAMLI) program is moving into the payroll phase, with employee and employer contributions beginning January 1, 2027.
If you have Maryland employees, you should already be working through your FAMLI registration and payroll setup requirements. Our B2E Tax Team should have already reached out to you with information and next steps. If you have not heard from them, please contact your Client Service Rep.
What do you need to know?
- Registration: Maryland FAMLI registration opened September 1, 2026.
- Payroll deductions: Contributions begin January 1, 2027.
- Contribution rate: The initial rate is 0.9% of wages, up to the Social Security wage cap. Employers may withhold up to 50% of the total contribution from employees.
- Quarterly reporting: The first quarterly wage report and contribution payment will be due April 30, 2027.
- Benefits: FAMLI benefits are scheduled to become available to eligible employees beginning January 1, 2028.
If you are considering an approved private plan instead of the State Plan, the current Declaration of Intent period runs through November 15, 2026.
Resources: