Tax insight

Employment tax planning for year-end and beyond

Insight
9 minute read
December 03, 2025

What happened?

At this time of year, it is important for employers to prioritize the review of payroll processes, compliance checklists, and confirmation of new reporting considerations. This year-end review process can help identify and mitigate potential discrepancies before they result in greater reporting challenges, such as amended employment tax returns. Notably, with the number of changes imposed by the One Big Beautiful Bill Act (the Act), employers should take additional steps to proactively position their organizations to address systems and processes required as of the new year.

Why is it relevant?

The employment tax rules impose requirements that restrict an employer’s ability to modify payroll after year-end. Identification of errors with respect to 2025 reporting in early 2026 can result in additional costs for both employers and employees, including amended return filing obligations. Therefore, identifying and addressing 2025 calendar year issues prior to year-end can result in the mitigation of costs and compliance challenges.

Actions to consider

Employers should review year-end procedures to analyze whether they are taking into account the standard list of reconciliation considerations, such as comparisons of Form W-2, Wage and Tax Statement, wage data to payroll records. Consideration of evolving legislative provisions for 2025 also includes state and local law, such as paid family and medical leave, increased contribution caps, new reporting provisions under the Act for qualified tips and overtime compensation, and state unemployment rate changes. Coordination among key stakeholders involved with compensation and benefits, expense reimbursement procedures, and legal considerations should enable timely identification of depositing and reporting obligations within 2025 and beyond.