04:05 AMERICAS
Every year, however, there seems to be a new concern that can put a stick in the spokes of the proverbial bicycle wheel of the process. This year, the One Big Beautiful Bill Act (OBBBA, P.L. 119-21) contains two major new provisions for payroll—retroactive to the beginning of 2025, covered in a previous article —and a few other changes that need attention. Also, a key provision of the 2022 SECURE 2.0 Act comes into play for employers offering retirement plans. Here’s a snapshot of what payroll needs to do to incorporate these changes for this year-end. The ‘No Tax on Overtime’ Provision of the OBBBA The law essentially means employers need to prepare a way to accumulate and notify employees who worked overtime in 2025 about the potentially qualifying overtime pay amounts. Problems arise because most systems that track overtime pay report overtime amounts as one and one-half times
Every year, however, there seems to be a new concern that can put a stick in the spokes of the proverbial bicycle wheel of the process.
the regular rate of pay for hours worked in excess of 40 in a work week, but the new law requires employers to report the half- time part of that total overtime pay amount. Therefore, service providers and employers are scrambling to go back to 1 January and recalculate overtime amounts to arrive at the half-time of the regular rate figure. Complications also occur with state overtime requirements that differ from the Fair Labor Standards Act (FLSA), or with employer policies more generous than the FLSA that still are bucketed as overtime pay. Also, the section of the FLSA referred to by the new tax law for employers to use includes several special overtime provisions for certain job types.
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GLOBAL PAYROLL MAGAZINE ISSUE 16
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