2026 Payroll and 1099 Guide

Grimbleby Coleman’s Client Accounting Services team has put together a high-level 2026 Payroll Summary to help employers manage payroll tax withholdings, deposit schedules, and key year-end deadlines. These resources provide guidance on submitting your 1099 information to us, as well as changes in State Disability Insurance rates, CalSavers, FUTA, and more. Let’s get you prepared for the upcoming year. 

Deadlines for Year-End 2025

New for Year-End 2025 

1099s 

Download and complete our 1099 worksheet for 2025 1099 vendor filing information. Use SafeSend to securely email the data to us. Prior year versions of the 1099 worksheet cannot be processed/used; the 2025 1099 worksheet must be used for proper reporting. We will file 1099 forms based on this information. This worksheet includes options for basic and enhanced services, along with a fee calculator. If 1099 processing is included in your fixed price agreement, we will prepare it on your behalf. Keep in mind that you can submit multiple 1099 worksheets; however, each submission will be processed and invoiced separately. 

For additional guidance using the worksheet and helpful videos, please visit our Client Resources page.  

As a reminder, W-9 forms should be collected before vendors are paid and should be filed under vendor records. As a good business practice, review for missing W-9s twice a year, also verifying that information (legal names, tax IDs, entity types) hasn’t changed. Grimbleby Coleman is a corporation, and you are not required to issue a 1099 to us.  

W-2s 

Continuing from last year, we’ll mail W-2 copies directly to employees, ensuring compliance, saving time and postage, plus meeting e-filing requirements by the deadline. Electronic copies will be available for your records via your Suralink Portal. Review your W-2s upon receipt to verify accuracy. W2s will be mailed by February 2, 2026, as required. Please allow mailing time of 10 days for your employees to receive their original documents. Once processed, you may download and provide an informational copy to your employees as needed.  

Reporting of fringe benefits on W-2

Employers should ensure they have correctly reported the value of fringe benefits in their employees’ wages. As a reminder, S Corporations with greater than 2% owner shareholders must report company-paid insurance premiums as wages. 

For 2025, Overtime and Tips will not be reported on W-2s as the IRS has not revised the forms. Employees should be advised to use their final pay stub to report qualified amounts to their tax preparers.  

Rush Fee 

Submit payroll records and 1099 worksheets by January 19, 2026, to guarantee on-time filing and avoid a $150 rush processing fee per submission. Late submissions (after February 2, 2026) may incur IRS penalties. 

Federal Unemployment Tax Act (FUTA) Credit Reduction 

California employers will be subject to an additional retroactive 1.2% FUTA tax for the entire 2025 calendar year. This results in a maximum of $84 additional tax per employee, limited to $7,000 of wages per employee. The due date for any outstanding 2025 FUTA tax is February 2, 2026. Read more here about the  FUTA Credit Reduction – California. 

New in 2026 

For 2026 payroll tax wage limits, rate withholding requirement changes, new retirement plan limits, and more, please see our 2026 Payroll Tax Summary. 

• State Disability Insurance (SDI): The rate increased to 1.3% and applies to all taxable wages without limit. 

• State Unemployment Rate Reminder: Enter your new rate into your payroll processing software or advise your payroll processor of your 2026 rate. Check your rate on EDD’s Rate Inquiry page.  

• One Big Beautiful Bill (OBBB): The OBBB requires reporting of tips and overtime for certain industries. The IRS has released a draft 2026 W-2. The important step for 2026 is to begin tracking all overtime and tips with the first paycheck if this applies to your industry.  

• 2026 1099 Threshold: The threshold will increase from $600 to $2,000, and thresholds will be adjusted annually for inflation. 

• CalSavers: By default, the program has an automatic 1% increase for employee deferrals. You must opt out or elect an alternate amount. 

• Sales Tax: Some rates have changed; refer to the California Franchise Tax Board’s Sales and Use Tax Rates page. 

Get in Touch 

Our Client Accounting Services team is happy to answer any questions. We hope these reminders help you get off to the right start. Thank you for putting your trust in our team, and please don’t hesitate to contact us for assistance.  

Here’s to another year of partnership, and a Happy 2026!