Payroll Compliance Changes for 2026: What Employers Need to Know
Payroll Compliance Changes for 2026: What Employers Need to Know
Last updated: January 2026
New year, new compliance headaches. Here's what changed on January 1st—and what's coming later this year—across all 50 states.
We'll keep this post updated throughout the year as new laws take effect.
Minimum Wage Increases
Twenty-three states and D.C. raised their minimum wage in 2026. If you have employees in any of these states, update your payroll systems now.
States with January 1, 2026 increases:
| State | 2025 Rate | 2026 Rate | Change |
|---|---|---|---|
| Alaska | $11.73 | $12.00 | +$0.27 |
| Arizona | $14.35 | $14.70 | +$0.35 |
| California | $16.00 | $16.50 | +$0.50 |
| Colorado | $14.42 | $14.81 | +$0.39 |
| Connecticut | $15.69 | $16.35 | +$0.66 |
| Delaware | $13.25 | $15.00 | +$1.75 |
| Florida | $13.00 | $14.00 | +$1.00 |
| Illinois | $14.00 | $15.00 | +$1.00 |
| Maine | $14.15 | $14.65 | +$0.50 |
| Maryland | $15.00 | $15.00 | No change (already at target) |
| Michigan | $10.33 | $10.56 | +$0.23 |
| Minnesota | $10.85 | $11.13 | +$0.28 |
| Missouri | $12.30 | $13.75 | +$1.45 |
| Montana | $10.30 | $10.55 | +$0.25 |
| Nebraska | $12.00 | $13.50 | +$1.50 |
| New Jersey | $15.49 | $15.49 | Indexed to CPI |
| New Mexico | $12.00 | $12.00 | No change |
| New York | $15.00 | $16.00 | +$1.00 (upstate catches up) |
| Ohio | $10.45 | $10.70 | +$0.25 |
| Oregon | $14.70 | $15.45 | +$0.75 |
| South Dakota | $11.20 | $11.50 | +$0.30 |
| Vermont | $13.67 | $14.01 | +$0.34 |
| Washington | $16.28 | $16.66 | +$0.38 |
Local minimums to watch:
- Seattle, WA: $19.97 → $20.76 (large employers)
- Denver, CO: $18.29 → $18.81
- New York City: $16.00 → $16.50
- San Francisco: $18.67 → $19.18
- Los Angeles: $16.78 → $17.27
Action required: Update payroll rates before the first paycheck of 2026. Don't forget tipped minimum wages—many states have separate increases.
Paid Leave Expansions
Several states expanded or implemented paid leave requirements this year.
Minnesota Paid Family and Medical Leave (effective January 1, 2026)
Minnesota's new PFML program is now active. Key details:
- Funding: Employees and employers split contributions (0.7% of wages total)
- Benefits: Up to 12 weeks for family leave, 12 weeks for medical leave (20 weeks combined max)
- Applies to: All employers with 1+ employees in Minnesota
- Action required: Begin payroll deductions and employer contributions
Maryland Family and Medical Leave Insurance (effective January 1, 2026)
Maryland's FAMLI program launched this year:
- Contributions: Begin in 2025, benefits start 2026
- Benefits: Up to 12 weeks
- Action required: Ensure you're registered and withholding correctly
Maine Paid Family and Medical Leave (contributions begin 2025, benefits 2026)
- Contributions: 1% of wages (split employer/employee)
- Benefits: Up to 12 weeks
Delaware Paid Family and Medical Leave (effective 2026)
Delaware joins the paid leave states:
- Applies to: Employers with 10+ employees (25+ for medical leave)
- Benefits: Up to 12 weeks
- Action required: Register with the state program
Paid Sick Leave Updates
Missouri (new for 2026)
Proposition A passed in November 2024, requiring paid sick leave for Missouri employers:
- Accrual: 1 hour per 30 hours worked
- Cap: 40 hours (small employers) / 56 hours (15+ employees)
- Effective: May 2025
- Action required: Implement accrual tracking and update policies
Nebraska (new for 2026)
Initiative 436 passed, requiring:
- Accrual: 1 hour per 30 hours worked
- Cap: 40 hours (small) / 56 hours (20+ employees)
- Effective: October 2025
- Action required: Update policies and tracking systems
Alaska (new for 2026)
Ballot Measure 1 passed:
- Accrual: 1 hour per 30 hours worked
- Cap: 40 hours (small) / 56 hours (15+ employees)
- Effective: July 2025
- Action required: Prepare for mid-year implementation
State Tax Changes
States with income tax rate changes:
Iowa: Continuing reduction to flat 3.8% (down from graduated rates)
Arkansas: Top rate drops to 4.4%
Nebraska: Top rate drops to 5.2%
SUI wage base increases:
Many states increased their unemployment insurance taxable wage base for 2026. Notable increases:
| State | 2025 Wage Base | 2026 Wage Base |
|---|---|---|
| California | $7,000 | $7,000 (unchanged) |
| Colorado | $23,800 | $27,200 |
| Hawaii | $56,700 | $59,100 |
| Idaho | $53,500 | $56,800 |
| Montana | $43,000 | $45,400 |
| Nevada | $40,600 | $42,100 |
| New Jersey | $42,300 | $43,300 |
| Oregon | $52,800 | $54,300 |
| Washington | $68,500 | $70,700 |
Action required: Update your SUI calculations for the new wage bases.
Final Paycheck Reminders
No major changes to final paycheck laws this year, but a reminder of the strictest states:
| State | If Fired | If Quit |
|---|---|---|
| California | IMMEDIATELY | 72 hours |
| Colorado | Immediately | Next payday |
| Massachusetts | Same day | Next payday |
| Nevada | Immediately | 7 days |
| Utah | 24 hours | Next payday |
California reminder: "Immediately" means at the time of termination. Not end of day. Not tomorrow. Now. Penalties are up to 30 days of wages.
→ Use our Final Paycheck Calculator to check your deadlines and potential penalties.
Workers' Compensation Updates
Rate changes:
Most states adjusted workers' comp rates for 2026. Check with your carrier for specific impacts to your industry classification.
Colorado Family and Medical Leave Insurance (FAMLI) integration:
Colorado's FAMLI program now coordinates with workers' comp for certain leave situations. Review your policies to ensure proper integration.
New Hire Reporting Reminder
Deadlines haven't changed, but here's a reminder of states with shorter-than-federal deadlines:
| State | Deadline |
|---|---|
| Alabama | 7 days |
| Georgia | 10 days |
| Iowa | 15 days |
| Maine | 7 days |
| Minnesota | 20 days |
| Rhode Island | 14 days |
| Vermont | 10 days |
| West Virginia | 14 days |
Federal default is 20 days. Don't assume—check your state.
Pay Transparency Expansions
The pay transparency trend continues:
States with pay transparency requirements (as of 2026):
- California
- Colorado
- Connecticut
- Hawaii
- Illinois
- Maryland
- Nevada
- New Jersey
- New York
- Rhode Island
- Washington
Common requirements:
- Include salary range in job postings
- Disclose pay scale to applicants upon request
- Provide pay ranges to current employees for their role
Action required: Review your job postings and internal processes for compliance.
E-Verify Updates
No major changes to state E-Verify mandates, but remember these states require it for most private employers:
- Alabama
- Arizona
- Florida (25+ employees)
- Georgia (10+ employees)
- Idaho
- Indiana
- Mississippi
- Nebraska
- North Carolina (25+ employees)
- South Carolina
- Tennessee
- Utah
What's Coming Later in 2026
Mid-year implementations:
- Alaska paid sick leave: July 2025
- Missouri paid sick leave: May 2025
- Nebraska paid sick leave: October 2025
Scheduled minimum wage increases:
- Florida: September 30, 2026 → $15.00 (final step)
- Various local jurisdictions: Check city/county schedules
Under consideration (may pass in 2026):
- Federal overtime threshold changes (currently enjoined)
- Additional state paid leave programs
- Further pay transparency expansions
Your 2026 Compliance Checklist
January:
- Update minimum wage rates in payroll
- Update tipped minimum wages
- Verify SUI wage base updates
- Confirm paid family leave contributions (MN, MD, DE, ME)
Q1:
- Review paid sick leave policies (MO, NE, AK coming mid-year)
- Audit pay transparency compliance in job postings
- Update employee handbooks for new leave programs
- Verify workers' comp coverage and rates
Ongoing:
- Monitor final paycheck compliance (especially CA, CO, MA)
- Track new hire reporting deadlines
- Subscribe to state agency updates
Stay Current
Laws change. Rates change. Deadlines don't move.
PayrollBeacon tracks payroll compliance requirements across all 50 states so you don't have to maintain 50 browser tabs.
Check final paycheck deadlines →
This post is updated as new laws take effect. Last reviewed: January 2026. This is general information, not legal advice. Verify requirements with official state sources or qualified professionals before acting.