CPAs were reminded how quickly the ground can shift under their feet. Here were some of the major payroll events of 2025:
- Overtime expansion is overruled. The Department of Labor had finalized a rule to raise the overtime exemption salary threshold step by step, with the biggest jump scheduled for January 1, 2025. But in late 2024, a federal judge blocked the new rule from taking effect.
Lesson learned: This event was a reminder that even well-publicized federal changes can be paused or reversed at the last minute, and that plans built around future effective dates can unravel without warning.
- New tax law throws many payroll curveballs. The No Tax on Tips and Overtime is probably the most discussed new provision of the One Big Beautiful Bill Act (OBBBA) of 2025. But there were many other provisions that also affected businesses and payroll:
- Stricter Medicaid eligibility rules that may increase a business’s role in tracking and verifying worker hours.
- Businesses must update their cafeteria plan documents to reflect an increase in the dependent care contribution limit from $5,000 to $7,500.
- Expanded access to Health Savings Accounts resulting in more benefits to track.
- Form 1099 reporting threshold for payments made to individuals increases from $600 to $2,000.
Lesson learned: Laws can be passed before the IRS (or state agencies) knows how they will be implemented, reminding businesses to stay alert and ready so they can understand and meet new payroll rules the moment they appear.
- New ways to pay. Employees started asking about alternative pay methods that stretch beyond standard bank transfers. Paying workers using cryptocurrency has gained traction, while payroll-on-demand services grew in popularity with employees who don’t want to wait for the next paycheck.
Lesson learned: Pay is branching into new formats, and CPAs now have to help businesses track not only the amount owed but the path it takes to reach an employee. The job isn’t just about issuing wages anymore; it’s also about matching payment methods to the way people prefer to get paid.
- Payroll and technology: A growing partnership. AI drifted into payroll processing in 2025 and quickly became part of the daily routine. Even with these new tools, though, many businesses realized they didn’t want to build or maintain all this technology by themselves. This is where third-party providers stepped in. Firms offering fully integrated payroll platforms helped CPAs and their business clients handle automated tax updates, real-time compliance checks, and streamlined data flows that would’ve been difficult for a single business or CPA team to engineer.
Lesson learned: CPAs don’t have to tackle payroll by themselves. Payroll providers can handle the tax compliance and technology, while CPAs can focus on providing strategic advising services for their business clients.
- Looking ahead to 2026. Payroll is looking at more major shifts in 2026. Expanded state-level paid leave laws, continuing implementation of the No Tax on Tips and Overtime tax break and other OBBBA provisions, and rising minimum wages are all on the docket in various places around the United States.
Lessons to be learned: More payroll learning is certainly on the way for CPAs and their business clients in 2026. Stay connected with ConnectPay as events unfold throughout the year.