What changed in US payroll for 2026
The 2026 Social Security wage base, new W-2 codes for tips and overtime, the new W-4 exemption checkbox, the $2,000 thresholds and what stayed the same.
7 min read · October 17, 2026
The 2026 numbers
| Item | 2026 |
|---|---|
| Social Security wage base | $184,500 (2025: $176,100) |
| Social Security rate | 6.2% employee, 6.2% employer (maximum $11,439 each) |
| Medicare rate | 1.45% employee, 1.45% employer, no wage limit |
| Additional Medicare | 0.9% withheld on wages over $200,000 in the year; no employer match |
| FUTA | 6.0% on the first $7,000, 0.6% after the full state credit |
| Supplemental wage withholding | 22% (37% above $1 million) |
Tips and overtime on the W-2
The One Big Beautiful Bill Act lets employees deduct qualified tips (up to $25,000) and qualified overtime (up to $12,500, or $25,000 for joint filers) on their own returns for 2025 through 2028. Employers do not change withholding for this, but they must report the amounts. The 2026 Form W-2 adds:
- Box 12, code TP: cash tips reported to the employer.
- Box 12, code TT: qualified overtime compensation. Only the premium half counts: for time-and-a-half, the extra half, not the whole overtime wage.
- Box 14b: the Treasury tipped occupation code, with box 14a for the usual "other" items.
- Box 12, code TA: employer contributions to Trump accounts.
For 2025 forms the IRS gave penalty relief (Notice 2025-62) for not reporting these separately. For 2026 forms there is no such relief announced, so track tips and overtime premium separately on every paycheck from January.
Form W-4 and Pub 15-T
- The 2026 withholding tables in Publication 15-T reflect the law change, including the permanent tax rates and higher standard deduction.
- Employees now claim exemption from withholding with a checkbox below Step 4(c) of the 2026 W-4, instead of writing "Exempt".
- Employees may give you a new W-4 to reflect the tips and overtime deductions; apply it like any other W-4.
New $2,000 thresholds
- The general 1099-NEC and 1099-MISC threshold is $2,000 for payments made in 2026. See 1099-NEC vs 1099-MISC.
- Publication 15 also applies a $2,000 threshold for W-2 reporting of wages with no income, Social Security or Medicare tax withheld.
FUTA and credit reduction
FUTA is 6.0% of the first $7,000 of each employee's wages, reduced to 0.6% if you paid state unemployment tax in full and on time. In states that have not repaid federal unemployment loans, the credit is reduced. For 2025 (paid with the Form 940 in early 2026), California was a credit-reduction state at 1.2%, making the net rate 1.8%, and the US Virgin Islands at 4.5%. The Department of Labor publishes the 2026 list in November.
Try the 2026 paycheck calculator
Our free calculator uses the 2026 Pub 15-T tables, the new Social Security wage base and Additional Medicare, the same code AcboBooks runs payroll with.
This article is general information, not tax, legal or accounting advice. Rules and dates change; check the official source or ask your accountant before acting.
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