It’s officially a new year, but that doesn’t mean 2025 ended without some lingering effects. Employers face an evolving regulatory environment shaped by immigration reform, AI legislation, unemployment tax adjustments, and the uncertain fate of key programs like the Work Opportunity Tax Credit (WOTC). In this blog post, we distill the most important takeaways from Experian Employer Services’ latest quarterly webinar, covering what HR, tax, and compliance teams need to know now to prepare for the rest of 2026.
While Congress has been historically inactive in 2025—passing only 36 bills—the federal regulatory machine never stopped. In Experian Employer Services’ November webinar, “Quarterly Regulatory & Legislative Updates for Employers (Q4),” experts Gordon Middleton and Wayne Rottger broke down the compliance shifts that will shape the road ahead.
Missed the live event? You can access the on-demand recording of Quarterly Regulatory & Legislative Updates (Q4) to hear directly from our compliance experts. This 60-minute session offers in-depth coverage of urgent topics including IRS withholding changes, state unemployment tax trends, and federal immigration enforcement. Watch now.
Congressional Inactivity Doesn’t Mean Employer Invisibility
Although Congress passed fewer bills than any time in modern history, executive action and federal agencies filled the gap. The president issued over 210 executive orders in 2025, and federal agencies like USCIS and DHS continued rapid-fire regulatory activity.
Among the biggest changes:
- H-1B Visa Petitions: A controversial $100,000 petition fee for some H-1B applications was introduced in September and clarified in October. This policy is being challenged by the U.S. Chamber of Commerce and others.
- EAD Auto Extensions: Effective October 30, 2025, DHS eliminated auto extensions for many Employment Authorization Document (EAD) categories—including asylum applicants, TPS holders, and refugees.
- E-Verify Enforcement: E-Verify operations remained active through the government shutdown, a signal that immigration vetting remains a priority. Employers were reminded to submit cases timely and document any delays.
One Big Beautiful Bill Act (OBBBA): Big Withholding Changes Ahead
The OBBBA continues to reshape how payroll and HR teams handle tipped employees:
- Tip Tracking: Employers must now identify “qualified tips” tied to specific occupations using Treasury-issued codes (nearly 70 new codes were released).
- 2026 W-2 Draft Changes: A new Box 14B will be introduced for these occupation codes, and Box 12 will include new reporting fields. Also expect a 15-line worksheet on the 2026 W-4 draft, which expands deductions.
- Employer Limitation: Employers can’t force employees to adopt the new W-4, so communication strategies must be prepared in advance.
Shutdowns and Backlogs: IRS and SSA Still Expect Timely Compliance
Despite mass furloughs at the IRS and other federal agencies, deadlines remain intact. Automated notices are still being sent, payments are due, and limited live support is available. SSA, DHS, and ICE continued operating at high capacity during the shutdown.
State-Level Legislation: The Real Compliance Movers
States continued to pass meaningful reforms while the federal government stalled. Highlights include:
- AI Restrictions: Illinois now prohibits AI in hiring if it leads to discriminatory outcomes.
- Wage Theft Notices: Rhode Island’s new hire notice requirement starts January 1, 2026.
- Pay Transparency: Massachusetts will require employers with 25+ employees to publish pay ranges starting October 2026.
- Paid Leave Expansions: Nebraska mandated new minimums for employers with as few as 11 employees.
Unemployment Legislation: A Rising Risk for Employers
2025 saw 188 unemployment-related bills, with many focusing on expanding access to benefits—even to striking workers. Washington and Oregon passed laws granting UI benefits during trade disputes, raising red flags about future trust fund stability.
Key takeaways:
- Trust Fund Risk: Most state UI trust funds are underfunded. Large-scale strikes could significantly drain them.
- FUTA Credit Reduction: California and the U.S. Virgin Islands are likely to face FUTA reductions in 2026. California alone owes $21 billion in federal UI loans.
- Taxable Wage Base Increases: Half of U.S. states are increasing UI taxable wage bases in 2026, affecting employer payroll budgets.
WOTC Renewal: Hopeful, But Not Done Yet
The Work Opportunity Tax Credit (WOTC) expired December 31, 2025. Although it has historically been renewed retroactively, no bill has yet been introduced. Industry advocates report promising signs, but employers are advised to continue processing applications to remain retroactively compliant if renewal occurs.
Final Key Takeaways
- Compliance Doesn’t Pause—even during a shutdown. Deadlines remain active.
- Prepare for OBBA Impact—new W-4 and W-2 formats will require payroll system updates.
- State Legislation Will Continue—watch for wage theft, pay transparency, and AI usage laws.
- UI Tax Changes Are Coming—plan for higher taxable wage bases and future trust fund pressures.
- WOTC Renewal Uncertain—continue screening and tracking candidates until further notice.
- Use a Trusted Compliance Partner—keeping up with regulatory changes is more than a full-time job.
Stay informed year-round with the Experian Employer Services Blog. Subscribe for updates on legislative changes, compliance tools, and insights from our subject matter experts.