Compliance Blog: Information on new taxes, state rate issues, and more!

Welcome to the QuickBooks Workforce Payroll blog, your source for payroll tax and compliance news. Did your state just announce a late rate change? Is a new tax on the horizon? We track the developments that affect your payroll, so you don't have to. Check back often, or subscribe, for timely alerts and guidance.

Recent QuickBooks Workforce Payroll Compliance Updates:

July 26: Support for After-Tax Roth SIMPLE IRAs & Trump Accounts!

QuickBooks Workforce has added the ability to set up and track contributions for After-Tax Roth SIMPLE IRAs and Trump Accounts (Section 530A IRA Accounts). Below, we explain each type or retirement account type and walk you through setup in QuickBooks Workforce. 

What is an After-Tax Roth SIMPLE IRA?

A Roth SIMPLE IRA lets employees contribute after-tax dollars to a tax-advantaged retirement account. They pay taxes on contributions now, but qualified withdrawals in retirement are completely tax-free.

As a small business employer, you're still required to make either matching contributions (up to 3% of compensation) or a fixed 2% non-elective contribution for eligible employees (the same requirement as a traditional SIMPLE IRA).

QuickBooks Payroll supports all six plan variations:

• Standard After-Tax Roth SIMPLE IRA
• Age 50+ catch-up for employees aged 50 and older
• Ages 60-63 catch-up for employees in this enhanced catch-up window
• Higher Limit versions of each of the above, for businesses that qualify for increased IRS contribution limits

Ready to get started? For step-by-step setup instructions for setting up retirement contributions in QuickBooks Workforce Payroll, see our Retirement Plan Deductions & Contributions article.

Note: If you've been using a different retirement item in QuickBooks to track After-tax Roth SIMPLE IRA contributions for Tax Year 2026, add the new After-Tax Roth SIMPLE IRA item, then contact customer support to have your prior contributions corrected. This ensures your retirement plan contributions are reported accurately at year end. 

What is a Trump Account (Section 530A)

A Trump Account is a tax-advantaged investment account available for children under 18. Similar to a beginner IRA, contributions grow on the child's behalf from birth through adulthood. The child owns the account, but a parent, guardian, or other authorized adult manages it until the child turns 18.

Withdrawals are generally not permitted during the growth period from account opening through the year before the child turns 18. After that, standard traditional IRA rules apply, including a 10% early withdrawal penalty before age 59 1⁄2, unless a qualifying exception applies (such as higher education expenses, a first home purchase, or certain medical expenses).

For a deeper dive on Trump Accounts, or for step-by-step setup instructions to set up contributions in QuickBooks Workforce Payroll, see our Trump Accounts blog post.

May 26 - Changes to Birmingham, Alabama Local Tax Processing

We want to provide an update about how Birmingham, Alabama local taxes are handled in QuickBooks Online Payroll. If you received an in-product alert about changes to Birmingham Local Taxes in QuickBooks Online Payroll, please continue forward.

The City of Birmingham will no longer accept paper coupons or checks as of June 1st which is currently how QuickBooks files and pays this tax. Because the agency has chosen not to implement an electronic bulk payment and filing program, QuickBooks will no longer be able to automatically file and pay Birmingham local taxes going forward. 

Here's what this means for you:

QuickBooks will stop collecting (impounding) Birmingham local tax funds as of May 15. What happens next depends on how often you are required to pay Birmingham local taxes.

• Monthly depositors: We'll pay your April Birmingham local taxes (due in May) to the agency on your behalf. Any funds collected for early May payrolls will be refunded to you shortly after May 15. Starting with your May liability due in June, you'll need to pay and file your monthly Birmingham local tax directly with the agency.
• Quarterly depositors: We'll refund any Birmingham local tax collected for April and May payrolls shortly after May 15. You'll need to pay and file your Q2 Birmingham local tax directly with the agency when it's due in July.

How to pay and file moving forward

Starting with taxes due in June (monthly) or July (quarterly), visit the Birmingham Revenue Division portal to submit your payments and filings. To help you stay on track, QuickBooks will send email and in-product reminders when your Birmingham local tax payments are coming due.

We know this is an unexpected change, and we're sorry for the inconvenience. If you have questions, please contact QuickBooks Support.

March 26: Retroactive Rhode Island 1099 Rules for Tax Year 2025

If you received a product alert related to late announced Rhode Island 1099 rules for Tax Year 2025, we want to explain the new rules and provide steps to take to file any missing state 1099s. The Rhode Island Division of Taxation recently issued retroactive guidance regarding 1099 informational filings for Tax Year 2025. The agency announced these new requirements on February 19, 2026 (after the February 2 due date for 1099 NECs).

What has changed? 

Previously, Rhode Island only required state 1099s to be filed if RI taxes were withheld. Effective immediately for Tax Year 2025, you must now file Form 1099 with the state if:

• The vendor earned more than $100, OR
• You withheld any Rhode Island taxes for the vendor.

Because of this late change, you now must file state 1099s for any RI vendor who earned over $100 or had RI income tax withheld. Since the state’s $100 threshold is lower than the federal $600 limit, you may need to file state 1099s even if you weren't required to file federal.

Next steps

If you have Rhode Island 1099s that you still need to file you can pull a report of 2025 RI vendor payments in QuickBooks as follows:

1. Go to Reports

2. Search for Vendor Contact List

3. Under Customize make sure the State column option is included

4. Sort or filter by RI on the State column to identify your RI vendors

5. Go to Transaction List by Vendor Report

6. Set the date to “last year” and review RI vendor transactions for 2025 to identify which ones are eligible for 1099s.

File through the RI Tax Portal

Once you have all your 2025 vendor data ready, complete your RI state 1099 filings online via the Rhode Island tax portal. If you don’t already have an account, you can create a new one from the sign in page. 

For more info on this late-breaking change from the RI Division of Taxation, see the official state advisory.

Payroll Adjustment & Overpayment Recoupment Template

The following notification is for Online Payroll customers who received an email notification related to a March 20 payroll adjustment. To ensure your impacted employees are aware of the situation and you document their agreement to return this advance, we have provided a draft notice below you can use.

To: [Employee Name] From: [Company Name] Date: March 20, 2026 

Subject: Important: Correction to your March 20th paycheck

Dear [Employee Name],

We are writing to inform you of a technical issue that occurred with our payroll provider, QuickBooks, on Thursday, March 19th. Due to a system error, your net pay for the March 20th pay period was higher than the amount owed to you.

This resulted in an overpayment of $[Insert Amount].

How we are resolving this:

To correct this discrepancy, we are applying an Advance Payment Deduction to your next scheduled paycheck on [Insert Next Pay Date].

• QuickBooks will deduct the overpaid amount of $[Insert Amount] from your next net pay.
• This adjustment ensures your year-to-date earnings and tax records remain accurate and that our payroll bank account is balanced.

We are here for you

We understand that payroll adjustments can be unexpected. We value your hard work and sincerely apologize for any confusion this system error may have caused.

If you have any questions regarding this adjustment or would like to review your pay stub details, please contact [Insert Name/Department] at [Insert Email/Phone].

Best regards,

[Employer Name/Signature] [Company Name]

South Dakota Administrative Fund Rate Change for 2026

Effective January 1, 2026, South Dakota increased the Administrative Fund tax rate from 0.02% to 0.08%. The Administrative Fund tax is paid on a quarterly basis, along with the rest of South Dakota State Unemployment Insurance taxes. The payment and associated filing are due on April 30, 2026.

Updating the 2026 Rate and Tax in QuickBooks

For South Dakota Online Payroll customers with the old 0.02% rate assigned, QuickBooks will automatically update the rate to 0.08% and adjust the quarterly tax amount before the payment and filing are due in April. Since this is an employer paid tax, this won't impact your employees pay.

While no action is required for our South Dakota Online Payroll employers, it's always a good idea to double check that your SUI rate is accurate in QuickBooks, and to update the rate in QuickBooks if it's incorrect.

Wyoming Support Fund Factor Rate Change 2026

Effective January 1, 2026, Wyoming increased the Employment Support Fund Factor tax rate from .042% to .060%. The Support Fund Factor tax is paid on a quarterly basis, along with the rest of Wyoming State Unemployment Insurance taxes. The payment and associated filing are due  on April 30, 2026.

Updating the 2026 Rate and Tax in QuickBooks

For Wyoming Online Payroll customers with the old .042% rate assigned, QuickBooks will automatically update the rate and adjust the quarterly tax amount before the payment and filing are due in April. Since this is an employer paid tax, this won't impact your employees pay.

No action is required from our Wyoming Online Payroll employers as QuickBooks will auto adjust this tax on your behalf before the April 30 due date.

West Virginia Withholding Third Party Agent Requirement 

The West Virginia Department of Revenue now requires Third Party Agent authorization for QuickBooks to transmit electronic withholding tax filings.

Action needed by March 31, 2026

If QuickBooks automatically files WV withholding forms on your behalf, or if you use QuickBooks to submit these filings electronically yourself, you need to add QuickBooks as your TPA by March 31, 2026.  

How to assign QuickBooks as your TPA

1. Log into the West Virginia MyTaxes website. If you don’t have an account, create one.
2. Navigate to the Manage Third Party Access section.
3. Click on the Grant Third Party Access link.
4. Fill in the third-party details:
5. In the 3rd Party Log on field, type PCtaxops
6. In the 3rd Party Email field, type tax_eservice@intuit.com and select Next.
7. Confirm the third-party information by clicking the “This is the correct 3rd Party” link.
8. Choose the accounts you want to grant access to by clicking on the account name.
9. Select the Access Level as File & Pay.
10. Click Submit.
11. Enter your password to finalize the process and click OK.

Assign QuickBooks as your TPA by March 31 and we’ll be able to send your first quarter WV IT-101Q filing electronically. If TPA access is not granted by March 31, you will need to handle the first quarter filing via the agency’s website. For more information, visit our WV TPA article.

Idaho Administrative Reserve Fund Rate 2026

There are some important changes to Idaho Unemployment Insurance (UI) tax rates for 2026 that we would like to provide an update on.

Administrative Reserve Fund: Rate set to 0.00%

Effective January 1, 2026, the Idaho Administrative Reserve Fund tax rate is now 0.00%.  For Idaho employers using QuickBooks Online Payroll, the rate is updated in your account to reflect the new zero percent rate.  QuickBooks will adjust any 2026 Admin Fund tax liability to zero in February. If you're a QuickBooks Online Payroll customer based in Idaho, you do not need to take any action regarding this rate change.

Workforce Rate: New range for 2026

The Department of Labor updated the Idaho Workforce Rate range for 2026 to between 0% and 0.05832%. The agency assigns a specific Workforce Rate based on the overall State Unemployment Insurance (SUI) rate. Details of the rates and a rate chart can be found on the agency’s website.

How to ensure your UI tax calculates accurately

While we will handle the Administrative Reserve Fund update, we recommend Idaho employers validate their overall Idaho SUI and Workforce rates for 2026.

1. Verify your 2026 rates against the notice you received from the state.
2. Update your rates in QuickBooks if they do not match.
3. QuickBooks will automatically adjust the tax once you save the new rate.

Because SUI and Workforce rates are employer-paid taxes, these updates will not impact your employees' net pay. For additional information on 2026 Idaho SUI rates, please visit the Idaho Department of Labor's website.

How to ensure mailed tax forms receive a timely postmark

As you close out the 2025 tax year, QuickBooks wants to keep you informed of USPS operational changes that may affect your business. If you mail tax forms or time-sensitive documents, you should pay close attention to how the postal service handles postmarks. While many businesses file electronically, those who rely on paper mailings may need to adjust their habits to avoid late-filing penalties.

"Mailing" your tax forms on the deadline may no longer guarantee the same-day postmark you expect.

The Change You Need to Know

The USPS recently clarified that new transportation adjustments mean mail collected from a drop box or your personal mailbox may not reach a processing facility on the same day.

While the USPS has not changed its official postmarking practices, it has optimized how mail moves through its network. Regional processing machines apply postmarks, not the carriers who pick up your mail. Consequently, the postmark reflects the date the facility first processes the mail, which may be a day or more after you sent it.

How to Guarantee Your Postmark Date

If you are approaching a deadline (such as the Feb. 2 due date for 2025 W-2s) and need a guaranteed postmark, follow these steps:

1. Visit a Physical Post Office: Take your tax forms directly to a USPS retail counter.
2. Request a Manual Postmark: Ask the clerk to apply a manual postmark to your envelopes in your presence. The USPS provides this service free of charge.
3. Verify the Date: This ensures your postmark matches the exact day you handed the forms to the postal worker, regardless of when the mail reaches a regional processing center.
4. Consider Extra Proof: For added security, purchase a Certificate of Mailing or use Certified Mail. These services provide a receipt that proves exactly when the USPS took possession of your documents.

Why Drop Boxes Risk Your Compliance

If you leave tax forms in a USPS drop box or your home mailbox, you lose control over the postmark date. The facility might not process that mail until the following day. A postmark date does not necessarily indicate the first day the USPS took possession of the mail; it only confirms they had it by the date printed. This delay could result in a late postmark, leading to IRS penalties or compliance issues for your business.

Plan Ahead

You can avoid this stress by mailing your forms several days early. However, if you mail them on the deadline, a trip to the post office counter remains the only way to ensure your business remains compliant.

For more detailed information on postmarking and recent timeline changes, read the official USPS statement or visit USPS.com.

How to set up and track qualified overtime in QuickBooks

The One, Big, Beautiful Bill (OB3), also known as the “Working Families Tax Cut Act," became law on July 4, 2025, as Public Law 119-21. The tax breaks received from this act will be taken when individuals file their personal income taxes. There are no changes to tax withholdings on paychecks. 

The rules for tracking and reporting “qualified overtime” for tax years 2026-2028 will require some attention when running payroll. Starting January 1, 2026, we added a new pay type to simplify the process for your business.

What is qualified overtime? ‌

Qualified overtime is the compensation that exceeds the regular rate of pay based upon section 7 of the Fair Labor Standards Act (FLSA) of 1938. 

• The FLSA provides that employers must generally pay covered, nonexempt employees one-and-a-half times their regular rate of pay for hours worked over 40 hours per week.
• This means that the “half” of the “time-and-a-half” required by the FLSA is “qualified overtime.”
• Amounts that exceed the “half” of time-and-a-half, or amounts paid more generously than what is required by the FLSA hours per week rule won't qualify for the tax breaks. This includes states which have policies that differ from the FLSA.

To track and report your employees' qualified overtime, follow these steps:

Note: The new item will be available to add to employees on or after January 1, 2026.

1. Navigate to the main Payroll section.
2. Select Edit Payroll Items, then New Payroll Item
3. Select Pay Type, then choose Qualified Overtime Pay
4. Select Save
5. Next, select Assign employee(s) and add all employees who receive overtime pay
6. Save your changes to apply the pay item to the selected employees

Important things to know

• Tracking only: This pay item is used for reporting purposes. It doesn't increase an employee’s net pay or impact their tax calculations.  It does not impact your Chart of Accounts.
• Manual adjustments: If you use our existing embedded overtime pay types, QuickBooks will automatically populate a tracking amount. However, you must manually calculate the amount based strictly on FLSA guidelines and edit the pre-populated figure, if needed.
• Flexibility: You can edit these amounts while running payroll or by editing a paycheck after it's been created.
• W-2 Reporting: This pay item will report on W-2s starting in 2026.  For information on ways to help your employees understand their qualified overtime amount for 2025, review our Working Families Tax Cut Act blog post.

Complete the year-end checklist 

Review the year end checklist for critical year-end dates, including info on running final 2025 payrolls, and important dates to be aware of related to W-2s and 1099s. The checklist also outlines key tasks to take to start off the new year right including steps for updating unemployment rates and deposit schedule rates for 2026 and more. No matter what QuickBooks Payroll product you're using, we have all the important dates to help you close out the year strong and start off the new year right!

View the checklist for QuickBooks Online Payroll

View the checklist for QuickBooks Desktop Payroll

View the checklist for QuickBooks Assisted Payroll

Set up your Minnesota Paid Leave Policy

Starting in 2026, Minnesotans will have access to a new paid leave program, providing financial support and job protection for life's most significant moments. The Minnesota Paid Family and Medical Leave (PFML) program, administered by the Department of Employment and Economic Development (DEED), is designed to help employees take time off for their own serious health conditions, to care for a family member, to bond with a new child, or for certain military or personal safety reasons.

Set up your policy by December 28 in QuickBooks Online Payroll

You can now set up your MN PFML policy in QuickBooks Online Payroll! Set up your policy by December 28 to avoid payroll disruptions. Learn how

Additional Program Details

Here's a breakdown of what you need to know about the program, including premium rates, employer and employee eligibility, and key resources.

Premium Rates and Contributions

The PFML program is funded by a premium on employee wages, which is shared by both the employer and employee.

• Premium Rate: For 2026, the premium rate is set at 0.88% of an employee's wages.
• Contribution Split: The total premium is split evenly between employers and employees. This means each will contribute 0.44% of the employee's wages.
• Small Employer Rate: Employers with 30 or fewer employees may be eligible for a reduced employer premium rate of 0.22%, as long as their average employee wage is less than 150% of the statewide average weekly wage. Employees at these businesses will still contribute the standard 0.44%.
• First Payments: The first premium payments are due from employers by April 30, 2026, based on wages from January 1, 2026, through March 31, 2026. Employers can begin deducting the employee portion of the premium starting January 1, 2026.

Employee and Employer Eligibility

The Minnesota Paid Family and Medical Leave program is designed to be broadly inclusive.

• Employee Coverage: The program covers nearly all employees in Minnesota, including full-time, part-time, temporary, and most seasonal employees, as long as they have earned at least $3,700 in the last year. Self-employed individuals and independent contractors can voluntarily opt into the program.
• Employer Coverage: Nearly every employer in the state is covered, regardless of business size or number of employees.

What actions should Minnesota employers take right away?

Minnesota has put together a list of 3 important steps that Minnesota employers should take right away as follows:

Step One: Set up Your Paid Leave Administrator Accounts Now

Before launch, employers must set up their Employer Account, designate a Paid Leave Administrator within their Employer Account and create an Administrator Account with Paid Leave.

• Go to uimn.org to register for an Employer Account. Most employers will already have one. This account will be used to submit wage detail reports and pay Paid Leave premiums.
• Employers must designate a Paid Leave Administrator in their Employer Account by following this step-by-step guide. This person will be the main point of contact between the organization and Minnesota Paid Leave.
• Employers must also create a Paid Leave Administrator Account at paidleave.mn.gov. This account is where administrators review leave applications and view Paid Leave determinations.

Step Two: Notify Employees

By Dec. 1, employers must notify their employees about the Paid Leave program’s launch. Employers are required to both hang a Paid Leave poster and inform employees individually.

• Posters must be displayed where employees can easily see them and must be posted in English and any other language that is primary for five or more workers.
• Employees must be notified individually in their primary language, and employees must acknowledge that they have received the information. This can be done by signing a form, acknowledging receipt electronically, or in another way decided by the employers.
• Posters and notices can be downloaded from the For Employers page on the Paid Leave site.

Step Three: Customize Paid Leave to Your Workplace

By January 1, employers should also make important decisions about how to set up their individual workplace policies under Paid Leave, including deciding how to split program premiums, deciding whether to offer supplemental payments to “top off” Paid Leave payments for employees taking leave and other items. Details on these and other policies can be found on the Paid Leave site's For Employers page.

Additional Program Details

While every state with paid leave is different, Minnesota’s premium rate ranks 4th lowest out of 14 state programs for cost to employers and employees. For large employers who already offer private paid leave plans, the move to a state plan will often result in cost savings. And for small employers, Minnesota Paid Leave will make a critical employee benefit affordable when it might not otherwise be. A new calculator tool will help employers and individuals estimate costs under Paid Leave. The tool gives an estimate of the premiums that will be first due in April 2026, after the program launches in January 2026.

Key Resources and Links

For the most up-to-date and comprehensive information, it is recommended to visit the official agency website.

• Minnesota Paid Leave Official website: https://mn.gov/deed/paidleave/
• Employer Information: https://mn.gov/deed/paidleave/employers/
• Individual and Family Information: https://mn.gov/deed/paidleave/employees/

Setting up and tracking MN Paid Leave in QuickBooks

Follow the steps outlined in our help article to add your MN PFML policy in QuickBooks Online Payroll now! Desktop Payroll customers will be able to add their policies after payroll update 22601 is released on December 18.

H.R. 1, The One Big Beautiful Bill Act (OBBBA) Updated 12/4/25

Big news for your business and your team! On July 4, the One Big Beautiful Bill Act (OBBBA)—also known as the Working Families Tax Cut—was signed into law. This legislation brings exciting updates to the tax landscape, including new deductions for qualified tips and overtime pay.

We know tax changes can feel complicated, but don’t worry—we’ve got your back. We’ve broken down the key details of the "No Tax on Tips" and "No Tax on Overtime" provisions so you can support your hardworking team with confidence for Tax Year 2025 and beyond.

No Tax on Tips

Under this new rule, workers can claim a tax deduction on their personal returns for up to $25,000 in qualified tips. “Qualified tips” are voluntary cash or charged tips received from customers or through tip sharing.

While this doesn't change how tips are taxed on paychecks today, here's what you need to know:

• Timeline: This deduction is effective from 2025 through 2028.
• How it works: The deduction applies only to federal income tax and is in addition to the Standard Deduction. Note that all tips remain subject to FICA tax.
• Action items: Employees may choose to fill out a new W-4 to adjust their paycheck withholdings, though it isn't required.
• Looking ahead: Eligible occupations will need to assign a Treasury Tipped Occupation Code (TTOC). You won't need this code for W-2s until 2026, but sharing it with your team now can help them get a head start on their 2025 filings. The Treasury is still finalizing the list, but a draft of the codes has been published.

No Tax on Overtime

Similar to tips, this provision allows for a tax deduction on personal returns for qualified overtime pay, capped at $12,500. Overtime will continue to be taxed on paychecks as well.

• Eligibility: The deduction applies only to overtime hours required by the FLSA (typically work over 40 hours a week).
• What is covered: It specifically covers the additional "half" of time-and-a-half pay.
• State vs. Federal: If your state or company policies differ from FLSA rules, only the overtime calculated per FLSA rules qualifies.
• Tax details: Like tips, this applies only to federal income tax. Overtime wages are still subject to FICA tax.
• Action Items: Employees may choose to fill out a new W-4 to adjust their paycheck withholdings, though it isn't required.

IRS Guidance & Reporting for 2025

In August, the IRS announced that there are no changes to standard forms W-2, 1099, and 941/944 for 2025. Since Form W-2 won’t be updated for 2025, many workers are left wondering, “How will I know the total qualified tips and overtime I can deduct on my tax filing?”

To provide further clarity on this, the IRS recently issued Notice 2025-62 providing detailed examples for reporting qualified overtime and tips for 2025. Review this notice for helpful examples if you, or a member of your team needs further guidance. 

The notice clarifies that while employers aren't required to provide a separate accounting of cash tips or qualified overtime, it’s recommended that they do so. 

How You Can Support Your Team

Since the standard forms haven't changed, we suggest providing your team with a little extra documentation to help them file accurately.

For Tips 

Most employees with wages under the Social Security limit of $176,100 can use the tip amounts reported in Box 7 of their W-2. If they have additional tips on Forms 4037 or 4137, they will need to provide those records to their tax preparer. Contractors can use earnings statements, receipts, daily tip logs, or other records to calculate qualified tips. 

To support your team, you can provide them with the following:

• Provide Records: Provide your employees with their W-2 and final 2025 pay stub with the year-to-date totals reflected. Provide a detailed statement of any qualified tips your contractors received in 2025, along with the Tipped Occupation Code.
• Clarify Non-Qualified Tips: Let them know if any of their tips during the year were “non-qualified,” (though the IRS is providing some relief for businesses who weren't tracking that detail during 2025).
• Leverage Technology: If your team uses QuickBooks Workforce, they already have 24/7 online access to their pay stubs and W-2s. You can also run an individual payroll report in QuickBooks after the final paycheck of the year and share it directly with them.

For Overtime 

Reminder! The eligible overtime tax deduction applies to overtime hours required by the FLSA. It specifically covers the additional "half" of time-and-a-half pay. 

• If you pay 1.5x (Standard): The qualified portion is one-third of the total overtime pay.
• If you pay 2.0x (Double Time): The qualified portion is one-fourth of the total overtime pay.

To support your team, you can provide them with the following:

• Provide Records: Provide employees with the final 2025 pay stub or a payroll report showing year-to-date overtime. In the unlikely event that you need to report overtime on a 1099, the recipient will also need to know how that overtime was calculated so they can confirm how much of the total amount is considered qualified.
• Explain Your Policy: Remind them how your company pays overtime, especially if it differs from the federal minimum (FLSA), so they know which calculation to use.

• Leverage Technology: If your team uses QuickBooks Workforce, they already have 24/7 online access to their pay stubs and W-2s. You can also run an individual payroll report in QuickBooks after the final paycheck of the year and share it directly with them.

Looking Ahead: Innovation for 2026

We're already building solutions to make the 2026 tax year even smoother for you. Stay tuned for:

• New items to track qualified tips and overtime.
• The ability to select Tipped Occupation Codes for employees.
• Updated reporting features for contractors.
• Updates to Dependent Care Contribution limits for Online Payroll.
• Updates to the W-2, 1099-MISC, and 1099 NEC forms for reporting tips and overtime provisions.

Trump Retirement Accounts

The Working Families Tax Cut also introduces new individual retirement accounts for children born between January 1, 2025, and December 31, 2028.

• Contributions: After an initial federal deposit of $1,000, accounts can have up to $5,000 contributed annually. Employers may contribute up to $2,500 of that annual maximum, which is excluded from the employee's income.
• What's Next: QuickBooks Payroll is exploring options to support these accounts starting in July-2026, when they become eligible for contributions.

We're committed to keeping you compliant and confident every step of the way. Later in 2025, we'll update this post with detailed instructions for setting up the new overtime and tips items. Stay tuned!

New Mexico UI Payment Dishonored Update

Some online payroll customers in New Mexico may have recently received a notice from the New Mexico Department of Workforce stating that their third quarter NM Unemployment Insurance (UI) payment was dishonored. The tax notice states that the payment needs to be resubmitted along with a $25 dishonored payment fee.

At this time, we're advising customers impacted by this issue, who also received an email from QuickBooks on November 7, to disregard the notice and not pay this tax payment or penalty to the agency. QuickBooks is investigating why the payment was dishonored and we’ll work with the agency to resubmit the payments in question.

We advised employers impacted via an email update to not contact the agency directly about this notice. We will follow up with additional details on the payment and penalty once our investigation is complete.