Federal Employment & Benefits Law Changes for 2026 - HR ALERTS

Federal Employment & Benefits Law Changes for 2026

Effective: January 1, 2026

Several federal employment, benefits, and tax law changes take effect in 2026, impacting health plan design, paid leave incentives, payroll tax limits, and retirement contributions. These updates apply broadly to employers nationwide, though applicability may vary based on plan design and workforce structure.

Key 2026 Federal Updates

Health Care Benefits (High Priority)

• Final Mental Health Parity rules require equivalence between mental health and substance use disorder benefits and medical and surgical benefits, including non-quantitative treatment limitations

Paid Family and Medical Leave

• Amendments to the federal Paid Family and Medical Leave Tax Credit take effect, updating eligibility and calculation requirements

Payroll Taxes and Benefits

• The One Big Beautiful Bill Act increases:

  • The tax-free dependent care assistance limit

  • Thresholds for independent contractor reporting and backup withholding

• New provisions address qualifying Direct Primary Care (DPC) arrangements

Retirement Benefits

• The IRS extends the deadline for the Roth catch-up contribution requirement

Federal and State Overlay Reminder

Many federal requirements layer on top of state and local employment laws rather than replace them. Employers operating in states with paid leave programs, mental health mandates, payroll reporting requirements, or state-sponsored retirement plans must ensure dual compliance with both federal and applicable state rules.

What Employers Should Do Now

Employers should review health plan parity analyses with their brokers and assess paid leave policies, payroll system limits, independent contractor reporting practices, and retirement plan administration ahead of 2026. Vida HR is actively tracking these federal changes and will partner with clients as compliance requirements take effect.

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Get day-to-day updates on Federal Employment & Benefits Law Changes for 2026 visit the Vida HR Knowledge Center (Vida HR Clients Exclusive).