Before creating the first payroll of 2026, it is wise to review the current settings to ensure they are properly configured. These amounts are not automatically updated in the End of Year Tax Update.

IMPORTANT: Once the fiscal year 2026 is established in BIS, it is vital to review and confirm all the Federal settings by going to:

System Wide Parameters | PR tab | Taxes tab | Select Year "2026" | Federal Tax Information button and review all fields on the Federal tab, the FICA Social Security Tax tab, the FICA Medicare Tax Tab, and the FUTA Tax tab.

According to the Social Security publication that can be found at:

https://www.ssa.gov/oact/cola/cbb.html

The following information for 2026 is available:

• OASDI Employee Social Security Tax Rate: 6.2%*
• OASDI Company Social Security Tax Rate: 6.2%*
• OASDI Wage Limit: $184,500
• Medicare Employee Tax Rate: 1.45%*
• Medicare Company Tax Rate: 1.45%*
• Medicare Wage Limit: No Limit

NOTE: Some taxpayers may be required to pay an Additional Medicare Tax if their income is over a specific limit. 2.35% Medicare tax (regular 1.45% Medicare tax + 0.9% additional Medicare tax) on all employee wages in excess of $200,000.

https://www.irs.gov/taxtopics/tc751

The Federal Unemployment Tax Rate (FUTA) and the wage limit for the 2026 calendar year have not changed. As of this email, the 2026 rate is 6.0% (less credit if applicable), and the wage limit is $7,000.00.

Most employers receive a 5.4% FUTA Tax Credit, resulting in a 0.6% net FUTA rate. However, states with outstanding FUTA debt may face an additional Benefit Cost Ratio (BRC) tax. Refer to Schedule A for your state's Reduction Rate and consult your accountant to ensure you're using the correct rate.

State SUTA and SDI rates and limits:

To verify your state settings, and any neighboring states if needed, go to:

System Wide Parameters | PR Tab | State Tax Information button: Select the State Tax button and review all the fields on the State tab, the SUTA tab, and the SDI tab.

Rates and limits can be verified on the individual state websites. The State Tax Information also includes a Tax Deferred tab that details each plan and whether it is subject to State, SUTA, or SDI tax. Federal settings for tax-deferred plans are located on the Tax Deferred Master Record, while local tax settings are on the Local Taxes Master Record under List | Payroll Adjustments | Local Taxes.

Additionally, if the Sales Tax Rate has changed, it can be updated in the Sales Tax Codes Master Record under List | Miscellaneous | Sales Tax Codes.

SPECIAL NOTE: When entering the rates in BIS, enter them as a rate, not as a percentage.

Example: 6.2% should be entered as 0.06200.

NOTE: For California Employers Only. The State Disability Insurance (SDI) withholding rate for 2026 is 1.30 percent, which applies to employees' total wages.

https://edd.ca.gov/en/payroll_taxes/rates_and_withholding/