Compliance Stuff

In this Client Alert, we describe some of the ways the recently enacted One Big Beautiful Bill Act (OBBBA) will impact employers. Tax Provisions: The tax provisions of the OBBBA are some of the most-anticipated changes. I. No tax on overtime pay Beginning in 2025, an employee who works “qualified overtime” is eligible to deduct up to $12,500 on their federal income taxes.[ 1]   For married persons filing jointly, the maximum deduction increases to $25,000; however, married persons who do not file jointly cannot get the deduction at all.   The allowable deduction is reduced (but not below zero) by $100 for each $1,000 that the employee’s modified adjusted gross income exceeds $150,000 ($300,00 for married persons filing jointly). It is important to note that the deduction only applies to overtime required under the Fair Labor Standards Act (FLSA) that is in excess of the individual’s regular rate (i.e., only the “half” of “time and a half”).  State-mandated over...

Takeaways: Trump Accounts are a new type of custodial savings account for children under 18, established under new Internal Revenue Code section 530A. For U.S. citizen children born between January 1, 2025, and December 31, 2028, there’s a $1,000 seed contribution from the U.S. Treasury. The White House states the purpose is to “afford a generation of children the chance to experience the miracle of compounded growth and set them on a course for prosperity from the very beginning.” Employers can contribute up to $2,500 per year (adjusted for cost-of-living increases after 2027) to a child’s Trump Account , and this contribution is generally tax-free to the employee. Total contributions are capped at $5,000 per year per child (adjusted after 2027 for cost-of-living increases). Trump Accounts must be invested in eligible mutual funds or exchange-traded funds that track qualified indices like the S&P 500 , with annual fees not exceeding 0.1 percent of the account balance. Earnings ...

On July 4, 2025, President Trump signed “The One Big Beautiful Bill Act” into law. While much attention has focused on the bill’s rejection of a proposed 10-year federal ban on state and local artificial intelligence (“AI”) regulation, the legislation also enacts sweeping new requirements with major implications for AI and technology companies. Key provisions include stringent restrictions on foreign influence in the AI supply chain, broad extraterritorial rules targeting “prohibited foreign entities,” enhanced domestic sourcing mandates, and rigorous supply chain integrity requirements. These measures present significant compliance and operational challenges, especially for multinational firms with global operations or foreign partners. This Alert highlights the most important aspects of the new law for companies in the AI sector, with a focus on the practical impact of foreign control restrictions, technology licensing limitations, and related compliance obligations. 1. Substantial F...

Congress’ recently passed budget and tax bill — the One Big Beautiful Bill Act — makes permanent a tax credit for employers who offer paid family and medical leave (PFML).   Congress first passed the temporary credit in 2017 as part of the Tax Cuts and Jobs Act. The credit, which was extended temporarily several times, allowed employers to claim a general business credit for offering PFML to eligible employees. The credit is worth 12.5% of the employee’s wages for a leave period and goes up by 0.25% for each percentage point of wages paid over 50%, up to 25%. The One Big Beautiful Bill Act, however,  expands the credit  in a couple of ways.   In addition to claiming a credit for wages paid, employers can now also get a tax credit for a portion of insurance premiums paid for an employee on PFML. It also now offers a credit for employers in states with mandated PFML laws. Previously, employers in those states were not eligible for the credit. Now, employers who provide...

On July 8, 2025, the Supreme Court of the United States issued a stay in  Trump v. American Federation of Government Employees , No. 24A1174, permitting the implementation of President Trump’s Executive Order No. 14210, which directs federal agencies, including the Occupational Safety and Health Administration (OSHA), to undertake large-scale reorganizations and workforce reductions. Coming days after the passage and enactment of the “ One Big Beautiful Bill Act ” ( H.R. 1 ) that largely incorporates OSHA’s fiscal year (FY) 2026 budget justification, continued reductions in agency headcounts appear inevitable. The Supreme Court’s action allows these measures to proceed while litigation continues, though it does not address the ultimate legality of the executive order or specific agency plans. Quick Hits The U.S. Department of Labor’s promise to modernize and use technology solutions to aid in performing its mission may be tested as a result of past and future headcount reductions a...

The “One Big Beautiful Bill Act” signed into law on July 4, 2025, makes two important changes to tax reporting requirements that should be of interest to employers.  1099 Reporting Threshold Increased to $2,000 and Indexed for Inflation Payments to non-employees for personal services must be reported on an “information return,” commonly called a Form 1099-NEC, if the payment is $600 or more in a calendar year. Similarly, payments of non-wages, such as for a settlement that includes penalties or emotional distress-type damages, are reportable on Form 1099-MISC if the payment is $600 or more. 1   Beginning in 2026, however, Section 70433 of the new Act increases the $600 threshold to $2,000, which will then be adjusted for inflation beginning in 2027 . In addition, requirements relating to backup withholding – required when the payee fails to provide a valid Form W-4 or Form W-9 using the taxpayer’s correct taxpayer identification number – will similarly be increased to $2,000 a...