The Latest in Payroll Compliance: Changes to Be Ready For

2025 is shaping up to be a big year for payroll law changes: several state governments are rolling out significant updates to paid leave, plus over 20 state minimum wage increases have already gone into effect.

Stay in the loop on the latest laws and be prepared for changes down the road with our quarterly roundup, featuring everything you need to know about state and federal payroll compliance updates.

Federal Compliance Updates

The Social Security wage base for 2025 is $176,100. This is the maximum amount of wages subject to Social Security taxes. The wage base went into effect on January 1, 2025.

The annual 401(k) contribution limit for 2025 has increased to $23,500 from $23,000.

Minimum Wage Updates

Effective January 1, 2025, minimum wage rates changed in a number of jurisdictions, including:

• Alaska: from $11.73 to $11.91
• Arizona: from $14.35 to $14.70
• California: from $16.00 to $16.50
• Colorado: from $14.42 to $14.81
• Connecticut: from $15.69 to $16.35
• Delaware: from $13.25 to $15.00
• Illinois: from $14.00 to $15.00
• Maine: from $14.15 to $14.65
• Michigan: from $10.33 to $10.56 ($12.48 starting 2/21/2025)
• Minnesota: from $10.85 to $11.13
• Missouri: from $12.30 to $13.75
• Montana: from $10.30 to $10.55
• Nebraska: from $12.00 to $13.50
• New Jersey: from $15.13 to $15.49 ($14.53 for employers with less than 6 employees)
• New York: from $15.00 to $15.50 ($16.50 for NYC, Long Island, and Westchester)
• Ohio: from $10.45 to $10.70
• Rhode Island: from $14.00 to $15.00
• South Dakota: from $11.20 to $11.50
• Vermont: from $13.67 to $14.01
• Virginia: from $12.00 to $12.41
• Washington: from $16.28 to $16.66

State Compliance Updates

Delaware

Delaware Paid Family and Medical Leave (PFML) Program

As of January 1, 2025, taxes will be collected to fund Delaware Paid Leave for employees who have been employed for at least one year and, within that year, have worked at least 1,250 hours with a single employer. The program will be funded by a contribution of up to 0.8% of an employee’s wages. Employers can require employees to contribute up to 50% of the paid leave contribution.

Employers must be registered with the Delaware LaborFirst platform to manage paid leave contributions.

The first due date for PFML contributions is April 30, 2025. Employees can submit claim applications for paid leave starting January 1, 2026.

Maine

Maine Paid Family and Medical Leave (PFML) Program

As of January 1, 2025, employers with employees in Maine are required to contribute to the new Paid Family and Medical Leave (PFML) program. Taxes will be collected to fund Maine Paid Leave for employees who have been employed for at least one year and, within that year, have worked at least 120 days with a single employer. The program will be funded by a contribution of up to 1% of an employee’s wages, depending on employee headcount.

• Less than 15 employees: Contribution of 0.5% of wages; employers can deduct the entire amount from an employee’s wages.
• More than 15 employees: Contribution of 1% of wages; employers can deduct 50% of the amount from an employee’s wages.

The first due date for PFML contributions is April 30, 2025. Employees will have access to paid leave benefits starting May 1, 2026.

Get Caught Up: What You Missed from Last Quarter

Didn’t have time to read the last roundup of compliance updates? We’ve got you covered! Check out some of the highlights below. ‌For more details, head over to November’s post.

California

Paid Family Leave: Effective January 1, 2025, employers can no longer require employees to use unused vacation time before receiving family leave benefits.

Maryland

Paid Family and Medical Leave: Maryland’s upcoming Paid Family and Medical Leave program has been delayed from October 1, 2024 to July 1, 2025. Employees will be able to start receiving family leave benefits starting July 1, 2026.

Pay Statement Changes: As of October 1, 2024, new pay transparency laws are in effect, impacting open job postings and pay statements. The Maryland Department of Labor provides examples and templates of compliant job descriptions and pay statements for employers to use.

Minnesota

Minimum Wage Change: Effective January 1, 2025, Minnesota has one minimum wage rate for all employers, eliminating the previous two-tiered minimum wage rates based on employer size.

New York

Prenatal Leave: New York became the first state to pass paid leave provisions specifically for prenatal leave. Effective January 1, 2025, New York requires employers to provide 20 hours of paid prenatal leave in addition to the sick and safe leave employers are currently required to provide.