Small and medium-sized businesses face a dynamic regulatory landscape. Laws and policies evolve, creating challenges for compliance. Paychex, Inc. has outlined key areas businesses must monitor in 2025.
A new administration takes office in January, potentially causing federal leadership and policy shifts. Businesses must stay vigilant and adapt quickly.
Kelee Delaney, Director of Compliance Risk at Paychex, emphasizes the importance of preparation.
“Our annual list helps businesses focus on what will impact them the most,” she says.
Paychex provides updates through Paychex Flex®, offering tools to simplify compliance.
Taxes, Retirement, and Paid Leave Changes
Taxes and tax credits are a significant concern. Numerous stipulations from the Tax Cuts and Jobs Act of 2017 will expire, and without congressional action, these provisions could cause substantial changes.
Changes include income tax withholding and pass-through qualified income tax deductions. Businesses should also monitor discussions around R&D expensing and bonus depreciation. The corporate tax rate might also see adjustments.
Staying informed on these developments is crucial for businesses to adapt their financial strategies and maintain compliance with evolving tax regulations.
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These potential changes could impact business planning. Companies must consult experts to understand how revisions will affect them. Tax planning will play a crucial role in 2025.
Retirement regulations are also evolving. Beginning January 1, 2025, most new workplace retirement plans must auto-enroll employees. This requirement stems from the SECURE Act 2.0, aiming to expand access to retirement savings.
State-sponsored retirement programs are also gaining traction. Minnesota, Missouri, and Nevada will roll out new programs in 2025. Employers should ensure their offerings comply with federal and state rules.
Paid leave laws continue to expand across the U.S. Over 40 jurisdictions already have Paid Sick and Safe Leave laws. In 2025, Alaska, Missouri, and Nebraska will join the list.
Future changes are also on the horizon. By 2026, Delaware, Maine, Maryland, and Minnesota will implement Paid Family Leave benefits. Preparing now can help businesses avoid disruptions later.
Wage Developments and AI Regulation
Wage and hour developments bring additional complexity. A Texas court’s decision vacated the Department of Labor’s 2024 Final Overtime Rule, reverting salary thresholds to 2019 levels.
Minimum wage increases will affect many businesses. Nearly 70 state, local, and industry changes begin on January 1, 2025. Employers should update payroll systems to meet these new requirements.
State pay transparency laws add another layer of regulation. These regulations mandate that employers reveal salary ranges during job postings and negotiations. Transparency helps employees but demands adjustments from businesses.
Artificial intelligence poses both opportunities and challenges. As AI adoption grows, so does the need for regulation. Businesses must address concerns like hiring bias and copyright issues.
Data privacy breaches add to the risks of using AI. New state laws will take effect between January and October 2025. These laws span eight states, including Iowa, Delaware, and Nebraska.
Companies relying on AI must stay informed. Establishing robust governance frameworks can mitigate risks. Best practices ensure compliance while leveraging AI’s benefits.
Proactive strategies are essential for navigating 2025’s regulatory challenges. Businesses must leverage technology to simplify compliance. Tools like Paychex Flex® provide timely updates and resources.
Updating policies is another critical step. Employers should align internal procedures with new laws. Training employees on these changes will promote smooth implementation.
Collaboration with experts is key. Legal and compliance specialists offer valuable insights, and their guidance can help businesses avoid pitfalls and seize opportunities.
Anticipating changes allows businesses to adapt efficiently. Tax sunsets, retirement mandates, and wage laws require preparation. Companies that plan can maintain compliance and protect their bottom line.
2025 promises a transformative year for businesses. Regulatory shifts will test adaptability and resilience. Staying informed and proactive will empower companies to navigate these changes successfully.
“2025 is bound to be an impactful year for most businesses,” Kelee Delaney says.
Employers should act now to prepare for the year’s opportunities and challenges.
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About the author
Dennis Fort is a Certified Financial Accountant (CFA), Certified Financial Planner (CFP), and Certified Public Accountant (CPA) with a Master's in Business Administration from the University of Pennsylvania. He has extensive experience providing expert financial advice to individuals and businesses, helping them achieve their goals with smart investments, budgeting, and long-term planning. Dennis is passionate about helping people make the most of their finances.
