1st January 2026 Tax Update Bulletin

This bulletin describes the changes included in the January 2026 Sage 50 Payroll Solutions Update for Sage 50 Accounting, Release 2024 and Release 2026.

Need to download the tax update? Visit the Sage 50—U.S. Edition: Download Portal.

Federal Tax Changes  

1. Federal Income Tax Withholding 
   The IRS has posted draft copies of Publication 15 with no changes from tax year 2025. Final changes may be upcoming.
2. Social Security Wage Base
   The 2026 social security wage base increased to $184,500.

 State and Local Tax Changes 

1. California Disability Insurance
   Withholding tax rate changed.
2. California State Income Tax
   Standard deduction and withholding table changes.
3. Colorado Family and Medical Leave Insurance
   Taxable wage limit based on the annual Social Security limit changed.
4. Colorado State Income Tax
   Standard allowances and tax rate changes for employees using DR_0004 and DR_1098.
5. Connecticut Paid Family Leave
   Taxable wage limit based on the annual Social Security limit changed.
6. Delaware Paid Family Leave
   Taxable wage limit based on the annual Social Security limit changed.
7. Hawaii State Income Tax
   Updated Withholding Allowance and Withholding Table changes.
8. Iowa State Income Tax
   Standard deduction changes.
9. Kentucky State Income Tax
   Tax rate and standard deduction changes.
10. Maine State Income Tax
    Withholding Table and Allowance updates.
11. Massachusetts Paid Family Leave
    Taxable wage limit based on the annual Social Security limit changed.
12. Minnesota Paid Family Leave
    New – Contributions begin January 2026.

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13. Missouri State Income Tax
    Withholding table and standard deduction changes.
14. Nebraska State Income Tax
    Withholding Table and Allowance updates.
15. New Jersey Paid Family Leave
    Withholding table and standard deduction changes.
16. New Jersey Temporary Disability Income Tax
    Taxable wage base and rate changes.
17. New Mexico State Income Tax
    Withholding table changes.
18. New York Paid Family Leave
    Taxable wage base and rate changes.
19. New York State Income Tax
    Withholding table changes.
20. New York Yonkers Income Tax
    Withholding table changes.
21. Oklahoma State Income Tax
    Withholding Tables changes.
22. Oregon Paid Family Leave
    Taxable wage limit based on the annual Social Security limit changed.
23. Oregon State Transit Tax Income Tax
    Withholding tax rate changed.
24. Rhode Island State Income Tax
    Withholding table and standard deduction changes.
25. South Carolina State Income Tax
    Withholding Table and Allowance updates.
26. Washington Paid Family Leave
    Withholding tax rate changed.

 

2026 State Unemployment Wage Limits   

The following state unemployment wage limits apply for tax year 2026. For details on how to apply the limits for your state, please review the following articles in the Year-End Center.  
How to automatically update your user-maintained payroll taxes and benefits for the new year using the Update Wizard 

State	Employee Annual Wage Limit	State	Employee Annual Wage Limit
Alabama	8,000	Montana	45,100
Alaska	51,700	Nebraska	9,000
Arizona	8,000	Nevada	43,700
Arkansas	7,000	New Hampshire	14,000
California	7,000	New Jersey	44,800
Colorado	30,600	New Mexico	33,200
Connecticut	27,000	New York	13,000
Delaware	12,500	North Carolina	34,200
DC	9,000	North Dakota	45,100
Florida	7,000	Ohio	9,000
Georgia	9,500	Oklahoma	28,200
Hawaii	62,000	Oregon	56,700
Idaho	55,300	Pennsylvania	10,000
Illinois	14,250	Rhode Island	29,800
Indiana	9,500	South Carolina	14,000
Iowa	20,400	South Dakota	15,000
Kansas	15,100	Tennessee	7,000
Kentucky	11,700	Texas	9,000
Louisiana	7,000	Utah	48,900
Maine	12,000	Vermont	15,400
Maryland	8,500	Virginia	8,000
Massachusetts	15,000	Washington	78,200
Michigan	9,000	West Virginia	9,500
Minnesota	44,000	Wisconsin	14,000
Mississippi	14,000	Wyoming	33,800
Missouri	9,000	Puerto Rico	7,000
		Virgin Islands	31,100

Bold and Red indicates the Wage Base Limit changed in the January 2026 tax update. 

 

Tax Forms    

Payroll Tax Forms: The payroll tax forms were updated within the Payroll Tax Form Selector window on or after December 20, 2025. To receive an update, select a Federal or State form and click on Next.  If there is an update, the next window to appear will have an option to automatically update your forms.  It is strongly recommended that you take all forms updates. 
 
NOTE: The payroll forms update also updates the forms lists that appear in the Payroll Tax Form Selector window. If you are trying to run a year-end 2025 form such as W-2’s, 940/943/945 but only see the 2024 forms listed then: 

• Select the 2024 form that you want and click on OK. 
• If you have a current Sage 50 subscription, the next window will prompt you to update your forms. 
• After taking the forms update, you will see the 2025 year-end forms listed in the Payroll Tax Form Selector window. 

 Special Note: The forms provided by Sage 50 are approved by the taxing authorities.  A few states have not yet approved their forms.  Any form, that can be printed and mailed, and is awaiting approval, will print with the banner “Record Copy Do Not File”.  We will be removing the “Record Copy” as the taxing agencies approve the forms.  There will be periodic online updates for these forms via the Automatic Update feature in Payroll Tax form. 

W-2 and 1099 Tax Forms Instructions:  

Click this link for 1099 Forms Instructions 

Click this link for W-2 Forms Instructions 

 

Making Sure That Your Tax Update is Applied 

The version for this tax update is 20260101 for release 2024 and release 2026. Follow these steps to make sure that your tax update was applied: 

For Release 2024 and 2026: 

1.     Open your Sage 50 company. 

2.     Select Help > About Sage 50 Accounting. 

3.     Confirm that the Installed Tax Update version number matches the version number listed above. 

 

Getting Help and Customer Support  

Help within your Sage 50 application is a great source of information.  Help can be accessed from a Sage 50 window by clicking on the Help button in the toolbar or pressing F1 key while on a field. 

In addition to Help, you can access Support or the Sage 50 Accounting User Community by going to https://communityhub.sage.com/us/sage50_us. 

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