Regulatory Roundup December 2022

As attention shifted to 2023, a few last-minute legislative updates occurred in December to accompany planned laws already going into effect on January 1. Perhaps the largest update was Congress' passage of the Consolidated Appropriations Act (CAA), also known as the Omnibus Spending Bill, to fund federal government operations through September 2023. While not as broad, the Internal Revenue Service (IRS) published mileage rates for 2023 and an advanced notice of final rulemaking for the Affordable Care Act (ACA). On the state-level, voters in Massachusetts approved an additional 4% tax on citizens earning more than $1 million annually. A review of these updates as well as the compliance and tax laws taking effect January 1 are below in this month's Regulatory Roundup.

2023 Employment Law Updates

Ranging from wage theft to equal pay, nearly two dozen employment laws take effect at the federal, state, and local levels in the first quarter of 2023, including:

• A.B. 1949 regarding bereavement leave in California
• S.B. 22-161 modifying Colorado laws on employment misclassification
• P.A. 102-0828 covering meal and rest break amendments in Illinois
• H.B. 4002 requiring overtime for agricultural workers in Oregon
• S.B. 270 regulating fair employment practices pay disclosure in Rhode Island

2023 Tax Law Updates

While federal Social Security and Medicare tax rates will go unchanged in 2023, the wage base limit for Social Security taxes increased to $160,200, and updated insurance wage base limits, minimum wage rates, and paid family and medical leave rates at the state and local levels took effect on January 1, 2023.

New Omnibus Spending Bill

With little more than a week remaining in 2022, the U.S. Congress passed a 4,000-page spending bill that outlines funding for the federal government in 2023. One of the most noteworthy updates in the CAA is the Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act, which expands upon the SCURE Act of 2019. The provisions within SECURE 2.0 intend to reform retirement planning, encourage retirement savings, and reduce retirement administrative requirements through several updates, including:

• Required automatic enrollment of eligible employees
• Increased catch-up limits for citizens aged 60-63
• New "starter plans" for employers who do not offer a 401(k) plan
• Expanded plan eligibility for part-time employees
• New emergency savings accounts

2023 Mileage Rates

Per IRS announcement 2023-03, standard mileage rates for business travel increased in 2023 to 65.5 cents per mile, while medical/moving and charitable rates remained unchanged. These rates apply to deductible transportation expenses paid or incurred for business, medical, or moving expense purposes on or after January 1, 2023, and to mileage allowances that are paid both to an employee on or after January 1, 2023 and for transportation expenses paid or incurred by the employee on or after January 1, 2023.

ACA Final Rulemaking Notice

The IRS' advanced notice regarding the final rulemaking for the ACA will extend the deadline for providers to furnish forms 1094-C and 1095-C to individuals. Employers who file information returns electronically to the IRS must file the 2022 Forms 1094 and 1095 by March 31, 2023. If filing paper forms, the deadline for the 2022 forms is February 28, 2023. This rule, however, does not apply to state-specific health care reporting requirements.

Massachusetts' New Millionaire Tax

For the first time since 1917, the state of Massachusetts will no longer have a flat tax on individual income. Beginning in 2023, the state will have an additional 4% income tax for those who earn more than $1 million annually, though that threshold will adjust annually to reflect cost of living increases. Revenue generated from the new tax will go towards public education and public transportation funding.

Additional Information

Get more details on the compliance updates from December here:

• Year-End Review HCM Compliance Laws Beginning in 2023
• New Payroll Tax Laws for 2023
• Congress Passes Omnibus Spending Bill with SECURE 2.0
• IRS Releases Mileage Rates for 2023
• IRS Finalizes ACA Furnishing Extension and 2022 Form Instructions
• Massachusetts Approves 4% Surtax on Millionaires in 2023

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This information is provided as a courtesy, may change, and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney, or Advisor.