Not every state adopted the tax deductions for overtime and tips: Although Michigan has, not all states adopted the tax deduction, such as Illinois and California.  Employers are not required to break out tips or qualified overtime on W-2s for 2025. They may include qualifying overtime on the W-2 if they choose, but it’s optional for 2026 (it would be a manual process). However, employers must still provide employees with a statement showing the amount of overtime and tips that may qualify for the deduction. 

NICU leave benefits a new trend: Colorado became the first state to require employers to provide paid leave to parents with a child in the Neonatal Intensive Care Unit (NICU). And next summer, a similar, yet less expansive, measure will go into effect in Illinois.  It’s welcome news to many working parents in those states. The Centers for Disease Control and Prevention estimates that about 10% of babies born in America will be admitted to the NICU – a rate that has grown in recent years. The CDC found that NICU admission rates jumped 13% between 2016-23, particularly among non-white patients. Under Colorado’s new Neonatal Care Leave measure, which amended the state’s existing Family and Medical Leave Insurance program that applies to most private employers in the state, employees can take up to 12 weeks of paid leave during the child’s hospitalization. This is in addition to the 12 weeks guaranteed to employees under FAML; birthing parents who underwent complications can claim an additional four weeks.  Illinois’ policy isn’t as broad; employers with more than 50 employees have to provide up to 20 days of unpaid leave, while smaller organizations must give 10 days.  Apart from job protection, the laws also prohibit retaliation.  Source: HR Executive 12/18/25

Lifetime annuities now permitted in retirement plans: The Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor (DOL) recently issued an advisory opinion clarifying that employers can offer lifetime income insurance products as default investments in 401(k) plans. The guidance follows an executive order from President Trump directing increased access to so-called “nontraditional” retirement plan assets. Lifetime income investment products ensure that some or all of a retirement plan participant’s account balance is paid out over time. By using these products, retirees are guaranteed a specific level of withdrawals even if their account balances are empty. EBSA’s eight-page advisory opinion explains when plan administrators may treat lifetime income investment options as qualified default investment alternatives (QDIAs) in defined-contribution retirement plans subject to the Employee Retirement Income Security Act (ERISA). QDIAs are default investment options for plan participants who don’t take affirmative action about where to invest their retirement funds. ERISA fiduciary duties and other federal regulations outline the standards for QDIAs.  Source: Hall Benefits Law 12/30/25

Although a possible Tier 3 classification, continue treating marijuana as you currently do: Marijuana may no longer be a Schedule I drug, but the shift isn’t expected to significantly impact residents of Michigan, where marijuana is already legal.  President Trump on December 18, 2025, issued a directive ordering that marijuana be reclassified as a Schedule III drug under federal law. Schedule III drugs are defined as having a “moderate to low potential for physical and psychological dependence” and include prescription drugs, like ketamine, certain barbiturates, and some opiate-based painkillers.  According to statements made by White House staff, the intent is not to legalize marijuana for recreational use but to expand research into medical use and health impacts. Source: Mlive 12/19/25

Student loan collections delayed: The Department of Education announced it would delay involuntary collections for federal student loans, including wage garnishments.  Defaulted borrowers were to be notified beginning the week of Jan. 7 that their wages would be garnished. The department said the delay gives it more time to implement student loan repayment reforms. More than 42 million Americans hold student loans, and the outstanding debt exceeds $1.6 trillion, according to the Congressional Research Service. Student loan borrowers who fail to make on-time monthly payments for more than 270 days are typically considered in default on their loans. At that point, the federal government has the right to seize up to 15% of borrowers’ after-tax wages – as well as a portion of their Social Security income and entire tax refunds, where applicable – to repay the debt.  Roughly 5 million borrowers were in default, and that number was expected to grow to nearly 10 million in the coming months.  Source: CNBC 1/16/26

Massachusetts pay reporting required by February 2: Massachusetts employers with 100 or more employees should prepare now for the next round of state pay reporting, as the deadline is quickly approaching. This year, the reports are due by February 2, 2026, as the normal February 1 deadline falls on a weekend and is extended to the next business day.  The portal can be found here:  EEO Wage and Workforce Data Reports.  Massachusetts’ “An Act Relative to Salary Pay Range Transparency” requires covered private employers to submit wage data reports. Employers required to file EEO-1 reports with the EEOC satisfy this requirement by submitting their EEO-1 report to the Commonwealth on an annual basis. Further, certain public-sector employers have similar responsibilities under EEO-4 reporting categories, with biennial filings due to the Commonwealth in even-numbered years.  Failure to comply may lead to state enforcement action, including potential civil penalties. Employers should confirm whether they meet the coverage threshold and ensure their filings are complete and ready for submission by the deadline. Source: Jackson Lewis 1/8/26