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Highlights: The Internal Revenue Service has released Publication 15 (a/k/a Circular E) Employer’s Tax Guide for use in 2026
Impacted Employers: All
Effective Date: Jan. 1, 2026
Summary: Important updates for 2026
Next Steps: Review Publication 15 to assist in accurate tax withholding.
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The Details
The Internal Revenue Service has released Publication 15 (a/k/a Circular E) Employer’s Tax Guide for use in 2026. Publication 15 explains an employer’s tax responsibilities, important updates for 2026, and employer instructions for payroll and non-payroll tax withholding.
Some of the highlights of “What's New” in the 2026 Publication 15 are as follows:
· Social Security and Medicare: Social Security tax remains 6.2% for employers and employees, but the wage base rises to $184,500. Medicare tax stays at 1.45% with no cap. Taxes apply to household workers earning $3,000 or more and election workers paid $2,500 or more.
· Tax Rates and Withholding: One Big Beautiful Bill Act (OBBBA) permanently extends individual tax rates. Supplemental wage withholding remains 22% (37% for amounts over $1 million). Backup withholding stays at 24%.
· Reporting Thresholds: Forms 1099-MISC and 1099-NEC thresholds increase from $600 to $2,000, indexed for inflation after 2026. W-2 reporting also adopts the $2,000 threshold when no federal tax was withheld.
· Tip and Overtime Deductions: Employees can deduct up to $25,000 in qualified tips and $12,500 ($25,000 joint) in qualified overtime for tax years 2025–2028. Employers must adjust withholding using updated W-4 forms and IRS Publication 15-T procedures.
· Moving Expenses: Employer-paid moving expense reimbursements are taxable, except for active-duty military and certain intelligence community employees.
· Trump Accounts: New IRAs for minors under 18 allow $5,000 annual contributions. Starting July 4, 2026, employers may contribute up to $2,500 annually, excluded from employee income under qualified programs.
· Electronic Payments: Employment tax refunds will be issued via direct deposit, and balance-due payments must be made electronically. Employers can access employment tax transcripts online.
For a copy of the 2026 Publication 15 please click on the link provided below:
2026 Publication 15