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2025 Potential
Credit Reduction
Additional Cost per Employee
(On first $7,000 of wages)
Legislative Updates
FUTA CREDIT REDUCTION
As of January 1, 2025, the following states had an outstanding Title XII
advance balance. Employers in these states may be subject to a
reduction in FUTA credit on their 2025 IRS Form 940 if the advance is not
repaid by November 10, 2025.
Be on the lookout! Payentry’s Tax Department typically issues FUTA
Audit Letters during the first week of the new year for Q4 of the prior
year. These letters are available via Payentry SecureView or in the Report
Vault in Connect.
Each audit letter includes a detailed calculation of the FUTA Credit
Reduction amount owed and the date of the impound to collect the
outstanding funds.
SECURE 2.0 ROTH 401K CATCH UP
Beginning in 2026, all catch-up contributions for 401(k) plan participants
earning more than $145,000 in the prior calendar year must be made on
a Roth (after-tax) basis, as required under the SECURE 2.0 Act.
To support this requirement, system enhancements have been made to
automatically identify eligible employees and apply Roth catch-up
contributions during payroll processing.
MINNESOTA PAID FAMILY LEAVE
Effective January 1, 2026, employers must begin deducting premiums for
Minnesota Paid Family and Medical Leave. The program is funded by a
0.88% payroll tax (split 0.44% each between employer and employee) on
wages up to $183,600.
Payentry will automatically add the required tax codes for employers and
employees with an active MNSUI code.
Action Required
Additional setup may be needed to ensure the correct
Roth deduction code is used once catch-up deferrals
begin. Please contact your Client Advocate to confirm your
catch-up settings are properly configured.
Companies that are exempt from MNSUI or have both covered and exempt
employees, tax codes will not be added automatically. Please contact
your Client Advocate to complete your setup. You will also need to register
for a Paid Leave Only account, and grant third-party access to Payentry.
Click
here to learn more.