Federal rules every employer must follow

These apply in every state, on top of your state’s rules. Each page links the IRS, Social Security Administration or Department of Labor source.

• 1099 reporting thresholds

  For payments made in 2026, a business files Form 1099-NEC for a contractor only once it has paid that person $2,000 or more for the year, up from $600, and most Form 1099-MISC payments such as rent moved to $2,000 as well. The IRS has set the threshold at $2,100 for payments made in 2027. Forms 1099-NEC for 2026 payments are due to contractors and the IRS by February 1, 2027, because January 31 falls on a Sunday.

• Federal unemployment tax (FUTA)

  Employers pay federal unemployment tax (FUTA) of 6.0% on the first $7,000 of each employee’s wages a year, and most receive a credit of up to 5.4% for paying state unemployment tax on time, leaving 0.6%, or $42 per employee. Employers in states that have not repaid federal unemployment loans get a smaller credit: for 2025 those were California (1.2%) and the U.S. Virgin Islands (4.5%), and the U.S. Department of Labor’s potential list for 2026, not final until after the November 10, 2026 repayment deadline, shows California (a potential 5.3%, made up of 1.5% plus an estimated 3.8% add-on that can be waived and replaced with a different add-on) and the U.S. Virgin Islands (a potential 4.8%). Form 940 for 2026 is due to the IRS by February 1, 2027, or February 10 for employers that deposited all their FUTA tax on time.

• Overtime exemption salary threshold

  To treat a salaried manager, administrator or professional as exempt from federal overtime, an employer must pay at least $684 a week ($35,568 a year) on a salary basis, and the job must also pass the duties tests. Highly compensated employees need at least $107,432 a year in total pay, including at least $684 a week in salary. These are the 2019 levels: federal courts vacated the 2024 rule that would have raised them, and the U.S. Department of Labor formally restored the 2019 text on May 15, 2026.

• Social Security wage base

  Employers and employees each pay 6.2% Social Security tax on wages up to the annual wage base, which the Social Security Administration has set at $192,300 for 2027, up from $184,500 in 2026. Medicare tax of 1.45% each applies to all wages with no cap. Employers must also withhold an extra 0.9% Additional Medicare Tax from an employee’s wages above $200,000 in a calendar year, and there is no employer match for it.

• Tips and overtime reporting on W-2s

  Workers can deduct up to $25,000 of qualified tips and up to $12,500 of qualified overtime pay ($25,000 on a joint return) for tax years 2025 through 2028, and employers must report the amounts those deductions rely on. On 2026 Forms W-2, due February 1, 2027, the IRS has employers put cash tips in box 12 with code TP, each tipped worker’s Treasury Tipped Occupation Code in new box 14b, and qualified overtime in box 12 with code TT, counting only the extra half of time-and-a-half that federal law requires. The IRS waived penalties for leaving these amounts off 2025 forms (Notice 2025-62), and that relief does not carry into 2026.

• W-2 and W-3 deadline

  Employers must give each employee a Form W-2 and file Copy A with Form W-3 at the Social Security Administration by January 31 each year, and the date is the same for paper and electronic filing. January 31, 2027 is a Sunday, so the IRS has set the deadline for 2026 Forms W-2 and W-3 as Monday, February 1, 2027. The 2026 form also adds new box 12 codes for tips and overtime and splits box 14 into 14a and 14b.