2026 PAYROLL UPDATE

FEDERAL CHANGES:

IRS W-4 Form for 2026

• 2026 W-4 form (English):  https://www.irs.gov/pub/irs-pdf/fw4.pdf

IRS Releases Publication 509 for 2026:  https://www.irs.gov/pub/irs-pdf/p509.pdf

2026 Federal holidays are as follows:

• ·        January 1 - New Year’s Day
• ·        January 19 - Birthday of Martin Luther King Jr
• ·        February 16 - Birthday of George Washington (President’s Day): 
• ·        May 25 - Memorial Day
• ·        June 19 - Juneteenth National Independence Day
• ·        July 3 - Independence Day
• ·        September 7 - Labor Day
• ·        October 12 - Columbus Day
• ·        November 11 - Veterans Day
• ·        November 26 - Thanksgiving Day
• ·        December 25 - Christmas Day

*Remember that a statewide legal holiday does not delay a due date for making a federal tax deposit. 

IRS Form 940:  https://w(ww.irs.gov/pub/irs-pdf/f940.pdf

• Publication 15, The Circular E. It is now available on the IRS website: https://www.irs.gov/pub/irs-pdf/p15.pdf

IRS Standard Mileage Rates

The IRS released Notice 2026-10 https://www.irs.gov/pub/irs-drop/n-26-10.pdf providing the 2026 standard mileage rates.

Beginning January 1, 2026, the standard mileage rates for the use of a car (vans, pickups or panel trucks) will be:

• 72.5 cents per mile for business miles driven, up from 70.0 cents for 2025
• 20.5 cents per mile driven for medical or moving purposes, decrease from 21 cents for 2025 
• 14 cents per mile driven in service of charitable organizations, unchanged from 2025

IRS Releases 2026 Pension Plan Limits:

§  Highlights of Changes for 2026

The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is $24,500, up from $23,500 for 2025. The additional catch-up contribution limit for individuals aged 50 and over increases to  $8,000, up from 2025. The Super Catch Up for individuals who will be aged 60, 61, 62 or 63 at December 31, 2026. The Super Catch Up limit for those individuals remains at $11,250.

The limit on annual contributions to an IRA increases to $7,500, up from $7,000 for 2025. The additional catch-up contribution limit for individuals aged 50 and over is indexed for inflation and increases to $1,100, up from $1,000 for 2025.

The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the saver’s credit all increased for 2026.

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor their spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase-out ranges for 2026:

• For single taxpayers covered by a workplace retirement plan, the phase-out range is $81,000 to $91,000, up from $79,000 to $89,000.
   
• For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $129,000 to $149,000, up from $126,000 to $146,000.
   
• For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $242,000 to $252,000, up from $236,000 and $246,000.
   
• For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The income phase-out range for taxpayers making contributions to a Roth IRA is $153,000 to $168,000 for singles and heads of household, up from $150,000 to $165,000. For married couples filing jointly, the income phase-out range is $242,000 to $252,000, up from $236,000 to $246,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $80,500 000 for married couples filing jointly, up from $79,000; $60,375 for heads of household, up from $59,250; and $40,250 for singles and married individuals filing separately, up from $39,500.

The amounts individuals can contribute to their SIMPLE retirement accounts is increased to $17,000, up from $16,500 in 2025.

Additional changes made under the SECURE 2.0 Act are as follows:

• The limitation on premiums paid with respect to a qualifying longevity annuity contract remains at $210,000.
• Added an adjustment to the deductible limit on charitable distributions. For 2026, this limitation is increased to $111,000, up from $108,000 in 2025.
• Added a deductible limit for a one-time election to treat a distribution from an individual retirement account made directly by the trustee to a split-interest entity. For 2026, this limitation is increased to $55,000, up from $54,000.

Social Security Wage Base Increases to $184,500 for 2026

On October 24th, the Social Security Administration (SSA) announced that the 2026 social security wage base will be $184,500, an increase of $8,400 from $176,100 in 2025 [SSA, Press Release, 10-24-2025].

The FICA tax rate remains 7.65% for 2026 up to the social security wage base (see the Social Security Fact Sheet: 2026 Social Security Changes). The maximum social security tax employees and employers will each pay in 2026 is $11,439, an increase of $520.80 from $10,918.20 in 2025.

2026 Income Tax Withholding Tables: https://www.irs.gov/pub/irs-pdf/p15t.pdf

Minimum Wage:

• ·        Federal Minimum Wage remains at $7.25 per hour
• ·        Federal Minimum Salary remains at $684 per week, or $35,568 annually

STATE CHANGES:

2026 California Employer’s Guide (DE 44): https://edd.ca.gov/pdf_pub_ctr/de44.pdf

Schedule for California Minimum Wage rate 2026.

California Minimum Salary: The exempt salary threshold increases for January 1, 2026 are as follows:
All employers, regardless of size: $1,352 weekly, $5,858.67 monthly, or $70,304 yearly

2026 Minimum Wage by State: