March 2026 Newsletter
OBBBA Tax Year 2026 is live, Georgia drops to 4.99%, Florida hits $15/hr — plus we launched a blog. Here's everything you need to know this month.
Published March 8, 2026
Lead Story
One Big Beautiful Bill Act
Tax Year 2026 guidance is live. Here's what changed for overtime, tips, and W-2 reporting.
Tax Year 2026
Updates Are Live
New IRS Guidance for Overtime & Tips
It's officially here. After months of anticipation, the IRS has begun rolling out guidance for Tax Year 2026 under the One Big Beautiful Bill Act (OBBBA). Here's what's changed and what you need to know.
No Federal Income Tax on Qualified Overtime — Starting January 1, 2026, employees can deduct up to $12,500 ($25,000 for joint filers) of qualified overtime pay from their federal taxable income. Qualified overtime is the premium portion (50% above regular rate) for hours worked over 40 per week under the FLSA. The deduction phases out above $150,000 ($300,000 for joint filers).
Important: Overtime pay remains subject to Social Security, Medicare, and state/local taxes. Employers must now report overtime pay separately on Form W-2 using the new IRS reporting codes.
No Federal Income Tax on Qualified Tips — Workers in tipped occupations can deduct up to $25,000 in qualified tips annually from federal taxable income. Tips remain subject to FICA taxes. Same income phase-out thresholds apply.
What You Need to Do — Review your payroll setup with your Account Manager to ensure overtime and tip reporting codes are configured correctly in isolved. The system has been updated, but your company-level settings may need verification.
Read our full guide →Hot Topics
HR & Payroll Updates
State-specific changes affecting your payroll this quarter.
Income Tax Rate Drops to 4.99%
Under HB 1001, signed by Governor Kemp, Georgia's flat income tax rate has dropped from 5.19% to 4.99% effective January 1, 2026. This applies to all wages earned in 2026 and forward.
The supplemental withholding rate has also been updated to 4.99%. isolved has already updated the Georgia withholding tables, so no action is required — but spot-check a few employee pay stubs to confirm.
Georgia's unemployment tax (GDOL) rates for 2026 were mailed in January. If you haven't sent your rate notice to us, please email it to support@bluewavehr.com.
Read more →Minimum Wage Reaches $15/Hour
As of September 30, 2025, Florida's minimum wage reached the final step of Amendment 2 at $15.00 per hour. The tipped employee minimum wage is now $11.98 per hour. Future increases will be tied to the Consumer Price Index.
Review the Employee Salary/Hourly Rate List screen in isolved to identify anyone who may need an adjustment. Don't forget to update your workplace posters — Florida requires the new minimum wage poster.
Read more →County Tax Rate Reminders
All 92 counties have their own income tax rates on top of Indiana's flat 2.95% state rate. County rates range from 0.5% to 3.38% — and the 2026 rates went into effect October 1, 2025.
It's critical that employees' county of residence is correctly recorded in isolved. Common rates for our clients:
- Marion County (Indianapolis): 2.02%
- Hamilton County (Carmel, Fishers): 1.62%
- Johnson County (Greenwood): 1.50%
Review Your Affordability Before Open Enrollment
The 2026 ACA affordability threshold is 9.96%. The federal poverty line safe harbor amount is $129.89/month for employee-only coverage. If you're an ALE (50+ full-time employees) and haven't verified your plan's affordability for 2026, now is the time.
💡 Use the ACA Plan Renewal - Affordability Projection Tool in isolved to run your numbers before your next open enrollment cycle.
New
We Launched a Blog 🎉
In-depth guides on everything we cover in these newsletters — plus construction payroll, job costing, and state-specific compliance resources.
No Tax on Overtime in 2026: What Every Employer Must Know
Read article →2026 Benefits Limits Cheat Sheet: HSA, FSA, 401(k) & More
Read article →Construction Payroll & Job Costing: Why Most Can't Handle It
Read article →Georgia's Flat Income Tax in 2026: Withholding Changes
Read article →We're proud to partner with you and look forward to helping your business succeed in 2026. Have a payroll concern or an idea to bounce around? Reach out — we're here for it all.
The BlueWave Team