Payroll and HR Impacts of the “One Big Beautiful Bill Act”


On July 4, 2025, President Trump signed into law HR 1, commonly known as the “One Big Beautiful Bill Act (OBBBA). This legislation includes a myriad of provisions that affect both businesses and individuals, including these items that will affect payroll and HR:


No Tax on Tips or Overtime?


While these provisions have been promoted as “no taxes,” that’s only true up to a point. First off, all tax withholding from an employee’s paycheck for earnings due to overtime pay or tips will continue without any change. The employee will then be responsible for reporting those designated amounts on their Form 1040 at the end of the year to receive a tax deduction for overtime earnings up to $12,500 (single filers)/$25,000 (joint filers).


Employees who receive tips can claim a tax deduction for qualified tips received during the year up to $25,000. The Department of Treasury has been directed to provide a list of occupations that customarily receive tips for purposes of this tip deduction.


Both of these deductions phase out by $100 for each $1,000 an employee earns above $150,000 per year ($300,000 for joint filers).


These provisions will require the IRS to modify Form W-2 to allow employers to report overtime and tips, beginning with 2025 forms due at the end of January 2026.


Increased Form 1099 Threshold


Up until now, businesses were required to file a Form 1099-MISC or 1099-NEC for payments above $600 to independent contractors and certain other businesses. This threshold has been increased to $2,000.


Increased Dependent Care FSA Contribution Limit


This one’s been a long time coming. The contribution limit for dependent care flexible spending accounts has been $5,000 for the past 40 years without any indexing for inflation. The OBBBA increases the contribution limit to $7,500 per year beginning in 2026 . . . still without any indexing for inflation. Hopefully, it won’t take another 40 years for this limit to catch up with the average cost of day care in the US, which is estimated to be more like $15,000.


If your company provides a dependent care flexible spending account benefit, look for updates from your FSA administrator with more guidance later this year.

Are You Sick of Employee Sick Leave Issues?



When an employee calls in sick, it can throw the whole day off balance — from scrambling to cover shifts to questioning the legitimacy of the absence. But what if you could remove the uncertainty altogether?


Adding telemedicine to your employee benefits package does just that. With 24/7 virtual access to care, automated documentation, and verified medical absences, telemedicine offers clarity for managers and convenience for employees. It’s a smarter way to manage sick leave, reduce downtime, and boost employee retention — all while cutting healthcare costs.

State By State News

Colorado



Privacy of Biometric Identifiers and Data

Beginning July 1, 2025, the Colorado Privacy Act will include new obligations for employers collecting and using biometric data and identifiers. The Act applies to Colorado businesses that use biometric data such as an employee’s fingerprint, voice, face, retina scan, or other analysis of an individual’s physical, biological, or behavioral characteristics. Employers may only collect biometric data with mandatory advance consent from the current or prospective employee for these four narrowly defined purposes:


  • Secure access to physical or digital systems
  • Timekeeping (beginning and end of the workday and to record meal and rest breaks over 30 minutes)
  • Workplace safety and security
  • Public safety during emergencies


Employers may not require that employees consent to biometric data collection as a condition of employment, nor can an employer retaliate against an employee who does not consent.


Employers must permanently destroy biometric data at the earliest of:


  • Fulfillment of the original purpose
  • 24 months after the last interaction with the employee
  • Receipt of a deletion request


Any entity that processes biometric identifiers must adopt a written policy that sets out a retention schedule for biometric data and provides procedures for a data breach. The entity must make its policy available to the public unless the data is only used for current employees and solely for the entity’s operation.


Prior to utilizing biometric data, an entity must clearly inform the individual that the data is being collected, the purpose for which it is being used, the retention timeframe, the name of any processor utilizing the data, and the specific reason why the biometric identifier is being shared.


To read a summary of this amendment to the Colorado Privacy Act, click here

Missouri



Governor Repeals Sick Leave Law

On July 10, 2025, Governor Mike Kehoe signed House Bill 567, which repealed the earned sick time provisions that just went into effect May 1, 2025. This means that employers who offered paid sick leave are no longer required to do so beginning August 28, 2025 but may continue the program if they wish. Employees will continue to accrue one hour of paid sick leave for every 30 hours worked through August 27, 2025, and also may use that leave through August 27, 2025. Beginning August 28, paid sick leave is not mandatory, including the use of any hours accrued while the program was in place. To read FAQs about paid sick time benefits, click here.


Minimum Wage Increases Curtailed

Missouri’s minimum wage in 2025 is $13.75 and is scheduled to increase to $15 per hour beginning January 1, 2026. The original legislation setting the minimum wage established annual increases after 2026 tied to the Consumer Price Index. Those annual increases have been eliminated.

Nebraska


Paid Sick Leave

Beginning October 1, 2025, the Nebraska Healthy Families and Workplaces Act will take effect. This new law requires all Nebraska businesses with more than 10 employees to offer paid sick leave to employees. Employers who already have a paid sick leave program in place that meets the requirements of the state-mandated program do not have to implement the state plan.


For purposes of determining business size, only individuals who worked at least 80 hours in Nebraska in a calendar year are counted. Employers with 10 or fewer employees are not required to pay sick time.


Under the program, employees will earn one hour of paid sick leave for every 30 hours worked, up to the following annual amounts:


  • Employees who work for small businesses with 11-19 employees are required to accrue at least 40 hours of paid sick time each year
  • Employees who work for businesses with 20 or more employees are required to accrue at least 56 hours of paid sick time each year


Hours can be banked as they are earned or frontloaded at the beginning of the year.


The employer must allow all unused hours to be carried over to the following year or

The employer may choose to pay out accrued but unused paid sick time provided the employee begins the new year at or above the minimum paid sick time requirement. The employer determines when the program year starts and ends.


Employers are required to notify employees about the program by September 15, 2025 or when an employee begins working for a company, whichever is later. Additionally, employers must display a poster containing the program’s information. The Nebraska Department of Labor will provide model notices and posters free of charge on their home page prior to September 15, 2025.


Employers will also be required to provide employees with a statement of their sick leave balance and usage each pay period, either on the employee’s paycheck or as an attachment; this requirement can also be satisfied by providing online access to the information. If you are a Mize payroll client, the system will automatically show the paid sick leave on the paycheck stub, in conjunction with the employer’s other paid leave balances to meet the state’s tracking requirements.


To read a fact sheet from the Nebraska Department of Labor, click here.

Nevada


Nevada Employee Savings Trust (NEST)

According to the Nevada Treasurer’s website, the NEST program is expected to launch by July 1, 2025.


Nevada employers that do not currently have a retirement plan such as a 401(k) are required to participate in the NEST program if they have six or more employees and have been in operation for at least three years. The state will reach out to eligible businesses to provide resources to help them register for the program and to inform their employees. If your business is a covered employer, you will receive notification either by email or regular mail that provides you with your company’s registration number.


Mize CPAs can help you with your registration and facilitate uploading your employee information, reports of withholdings, and payments. Please reach out to your payroll processor once you have your registration number.


Eligible employees (those who have been employed for at least 120 days and are at least 18 years old) will be automatically enrolled in the program but can opt out at any time without penalty. Contributions start at a default rate of 5%, but employees can adjust their contribution amount. Contributions are deposited into a Roth IRA that will be set up on the employee’s behalf.


For more details, visit the NEST website by clicking here.

Tools You Can Use

Electronic Pay Solutions


Employees like to get paid on time. Sometimes that’s harder than it might seem. With delivery issues, severe weather, and wildfires frequently in the news and maybe even your backyard, getting paychecks to employees can be difficult. That’s where electronic payroll solutions like direct deposit and pay cards can be a great solution.


Electronic pay solutions can also save you money. The costs of both printing and delivery are going up, which increases your payroll fees. With direct deposit and pay cards, employees can access their pay stubs and year-end Forms W-2 and 1095 online through the Mize payroll portal.


Read more about the benefits of electronic pay from our Insights blog by clicking here.  

On-Demand Pay

 

Tapcheck is an on-demand pay provider, empowering employees to take control of payday. Seamlessly integrated with payroll systems, Tapcheck boosts retention, productivity, and financial wellness—at no cost to employers and with no change to payroll.

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