Takeaways

• The IRS ended 2025 transition relief so payroll systems, reporting workflows and workforce policies should be fully operational in 2026 for information returns, benefit plan operation, immigration compliance pressure, and workforce policy impacts.
• Immigration and benefits compliance costs rise in 2026, driven by new OBBBA mandated immigration fees, heightened worksite enforcement expectations and benefit plan updates.
• OBBBA provisions continue phasing in through 2028; employers should engage counsel and vendors proactively to manage compliance risk and minimize disruption.

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Article

H.R. 1 became law as Public Law 119-21, the “One Big Beautiful Bill Act” or “OBBBA,” on July 4, 2025. Although several of the most significant employer-facing provisions affected operations in 2025, the focus shifts to full operational compliance in 2026, particularly in payroll reporting, benefit plan administration, and immigration compliance readiness.

We recap key employer obligations and planning considerations for 2026, highlighting where temporary transition relief applied in 2025 but should not be mistaken for long-term flexibility.

Payroll Modernization and Reporting: 2026 Is the Operational Inflection Point

The OBBBA created new federal income tax deductions for qualified tips and qualified overtime compensation for individuals, applicable for tax years 2025 through 2028. Although these deductions are claimed by employees, employers play a central role in...

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