The One Big Beautiful Bill Act (OBBBA) introduces changes and new requirements for reporting overtime pay in 2026. The changes are required to enable employees to claim certain overtime deductions on their personal tax return. The new tax deduction applies only to the ‘Qualified Overtime Compensation’ portion of overtime pay. The Qualified Overtime Compensation is the premium portion of overtime pay, or that extra “half” portion of “time-and-a-half” compensation. For example, if an employee earns $20/hour and works overtime, the overtime pay is $30/hour. Of the $30/hour, in this example the $10/hour is the Qualified Overtime Compensation that may be deductible under the new rule. Not all overtime will qualify for the deduction by employees.  Only overtime pay required by the Federal law Fair Labor Standards Act (FLSA) is eligible. Overtime Pay required by California regulations will not be included in the tax deduction. This means the California

The One Big Beautiful Bill Act (OBBBA) requires changes to tax reporting on overtime and tips. However, the IRS announced that, as part of the phased implementation of the OBBBA, there will be no changes to tax returns or federal withholding tables for Tax Year 2025. The IRS will not be making adjustments for 2025 related to the OBBBA, and forms will remain the same. Specifically, Forms W-2, existing Forms 1099, Form 941, and other payroll forms will not change for 2025. Federal income tax withholding tables will continue as they are. Employers should continue using current reporting and withholding procedures until 2026. The IRS explained that delaying changes until 2026 is meant to reduce confusion during the upcoming tax filing season and give businesses and tax professionals more time to prepare for implementation. “These decisions are intended to avoid disruptions during the tax filing season and to give the IRS, business, and tax professionals enough time to implement the c

California’s minimum wage will be increasing in 2026. For hours worked on or after January 1, 2026, the new California minimum wage will be $16.90/hour, a 2.49% increase from the current rate of $16.50/hour. This new rate applies to all employers, regardless of size. The wage increases also apply to full-time exempt employees, whose minimum salaries will increase to $70,304/year ($1,352/week), also an increase of 2.49% from the current salary minimum of $68,640/year ($1,320/week)  To view the certified letter from the California Department of Finance (DOF) regarding these new minimum wages, click here: https://dof.ca.gov/wp-content/uploads/sites/352/2025/08/Minimum-Wage-Increase-Notification-Governor-and-Legislative-Letter.pdf For a current listing of the California City & State Minimum Wages, view our page here: https://californiapayroll.com/california-minimum-wage/ Don’t forget, the required Labor Law Posters will also need to be updated.  Contact us if

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California’s COVID-19 Supplemental Paid Sick Leave (SPSL) extended until December 31, 2022 California’s COVID-19 Supplemental Paid Sick Leave (SPSL) has been extended until December 31, 2022 under AB-152; however, this extension does not provide employees with additional hours of SPSL. The bill also allows employers to require additional COVID-19 testing in certain circumstances. The state is also establishing a grant program to reimburse qualifying small businesses and non-profits for SPSL costs. Governor Gavin Newsom signed AB-152 into law on September 29, 2022. Here are the highlights of the newest changes: SPSL Extension COVID-19 SPSL is now extended through December 31, 2022; it was previously set to expire on September 30, 2022. This extension doesn’t provide employees with additional hours of SPSL; employees who have already used or exhausted their SPSL bank(s) are not entitled to more. Employees are still subject to a cap of 80 total hours of SPSL in 2022. &nb