Paychex, Inc., a leading provider of human capital management solutions, has released its annual list of top regulatory issues for small and medium-sized businesses to watch in 2025. With a new U.S. administration and significant regulatory changes anticipated, businesses must stay ahead of evolving compliance requirements to protect their operations and employees.
This list, developed by Paychex’s compliance and government relations experts, highlights critical areas such as taxes, retirement, paid leave, wage and hour changes, and AI and privacy.
Key Regulatory Issues to Watch in 2025
- Taxes and Tax Credits
- Provisions from the 2017 Tax Cuts and Jobs Act (TCJA) are set to sunset by the end of 2025, potentially impacting income tax withholding and the pass-through qualified income tax deduction.
- Businesses should also anticipate discussions around corporate tax rates, research and development expensing, and bonus depreciation.
- Retirement
- As of January 1, 2025, new 401(k) or 403(b) plans must include auto-enrollment per SECURE Act 2.0.
- State-sponsored retirement programs continue to grow, with Minnesota, Missouri, and Nevada expected to launch programs in 2025.
- Paid Leave
- Over 40 U.S. jurisdictions already have Paid Sick and Safe Leave (PSSL) laws, with more to come in Alaska, Missouri, and Nebraska.
- States like Delaware, Maine, Maryland, and Minnesota are preparing to offer Paid Family Leave benefits by 2026. Businesses should start preparations in 2025.
- Wage and Hour Developments
- The vacating of the U.S. Department of Labor’s 2024 Final Overtime Rule reverts salary thresholds for exemptions to 2019 levels.
- Nearly 70 minimum wage increases across states, localities, and industries will take effect in January 2025.
- Pay transparency laws are also expanding across multiple states.
- AI and Privacy
- AI innovation is driving new regulatory frameworks at the state level. Businesses must stay informed on laws addressing hiring bias, copyright threats, and data privacy.
- Eight new state-level AI regulations will be enacted between January and October 2025, including in Iowa, Delaware, and New Jersey.
Navigating regulatory changes is critical for businesses to remain compliant and competitive in 2025. Paychex’s annual list provides a roadmap to prepare for these challenges and opportunities, ensuring businesses stay ahead of evolving legislation.
