2nd January 2026 Tax Update Bulletin

This bulletin outlines the key federal and state tax changes, updated wage limits, and payroll form updates included in the 2nd January 2026 Sage 50 Payroll Solutions Update. Payroll administrators should review these changes and ensure their systems are updated to remain compliant for the 2026 tax year.

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

Federal Tax Changes

1. Federal Income Tax Withholding

The 2026 withholding tax tables have changed. New filing statuses introduced with the revised W-4 Form (2020) remain, while prior statuses are available for employees using the 2019 or earlier form. More information: Payroll tax year 2020 W-4s

State and Local Tax Changes

1. Arkansas State Income Tax
   Standard deduction, Mid-Range value, and withholding table changes.
2. Hawaii Temporary Disability Insurance
   Maximum weekly wage base and Average annual wage changed.
3. Illinois State Income Tax
   Withholding allowance update.
4. Indiana State Income Tax
   Withholding rate changed.
5. Louisiana State Income Tax
   Standard deduction changes.
6. Massachusetts State Income Tax
   Annual high threshold amount changed.
7. Michigan State Income Tax
   Personal exemption update.
8. Minnesota State Income Tax
   Withholding allowance and withholding table changes.
9. Mississippi State Income Tax
   Withholding tax rate change.
10. Montana State Income Tax
    Withholding table changes.
11. North Carolina State Income Tax
    Standard deduction changes.
12. North Dakota State Income Tax
    Withholding table changes.
13. Oregon State Income Tax
    Standard deduction, withholding allowance, and withholding table changed.
14. Rhode Island Disability Insurance
    Taxable wage base and contribution rate changes.
15. Vermont State Income Tax
    Withholding table and allowance updates.

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	54,200	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	17,600
Delaware	12,500	North Carolina	34,200
DC	9,000	North Dakota	46,600
Florida	7,000	Ohio	9,000
Georgia	9,500	Oklahoma	28,200
Hawaii	64,500	Oregon	56,700
Idaho	58,300	Pennsylvania	10,000
Illinois	14,250	Rhode Island	30,800
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	50,700
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	32,100

 

Note: Bold text in the original table indicates States where the wage base limit changed in this update.

Payroll Tax Forms

Payroll tax forms were updated in the Payroll Tax Form Selector window on or after December 20, 2025. Apply all updates promptly.

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 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.

• 1099 Forms Instructions
• W-2 Forms Instructions

Verifying Your Tax Update

The version for this tax update is 20260102 for Release 2024 and Release 2026. To confirm your update:

1. Open Sage 50 company.
2. Select Help > About Sage 50 Accounting.
3. Confirm the Installed Tax Update version matches 20260102.
   

Getting Help and Support

Access in-product help by clicking the Help button or pressing F1. For additional support, visit the Sage 50 Accounting User Community.

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