Release: 2026-8.56.0
Update: September 24, 2026
Canada
Federal
Income Tax – ACTION REQUIRED - effective September 24, 2026
FIT taxable wage on Canadian paychecks did not reflect the Deduction for Living in a Prescribed Zone or Annual Deduction Amount settings.
When either "Deduction for Living in a Prescribed Zone" or "Annual Deduction Amount" was set in Tax Maintenance > Global Tax Settings, the FIT tax amount was calculated correctly, but the FIT taxable wage shown on the paycheck did not reflect these deductions. This applied to employees of any pay frequency and could result in a discrepancy between the taxable wage displayed on paychecks/T4 Box 14 and the actual tax calculation.
This has been fixed; FIT taxable wage now reflects the annualized per-period amount of both deductions. FIT tax amount calculations are unchanged. PIT taxable wage is not affected by this fix.
This fix applies in the future only; it does not retroactively adjust past paychecks.
Action Required:
If you have used the "Deduction for Living in a Prescribed Zone" or "Annual Deduction Amount" in the Global Tax Settings, please review the FIT taxable wages on paychecks issued before this fix. This issue impacted the taxable wage figure, but it did not affect the tax amount, so your CRA remittances remain unchanged. However, you may need to correct the T4 Box 14 reporting for the affected period. We recommend reviewing the 2025 paychecks for any Canadian employees with these deductions configured and amending the T4s as necessary.
Income Tax – effective September 24, 2026
Additional Tax is no longer a required field on the Tax Maintenance (PR208000) form under the Global Tax Settings tab or the Employee Payroll Settings (PR203000) form under the Tax Settings tab.
CPP/QPP - ACTION REQUIRED – effective September 24, 2026
Fixed an issue where the default taxability settings for CPP2 and QPP2 did not consistently match CPP and QPP for the following Wage Types:
- Qualified Moving Expense Reimbursements
- Stock Options
- Van Pool/Transit Passes
- Qualified Parking
- Severance Pay
- Educational Assistance (Non-job Related)
CPP2 now mirrors CPP, and QPP2 now mirrors QPP, for these Wage Types.
Action Required: If you use any of the wage types listed above, review affected employee records, particularly for employees earning above the CPP2/QPP2 threshold (YMPE), to confirm taxability settings and correct any prior pensionable earnings calculations as needed.
United States
Most States
On the Global Tax Settings tab of the Tax Maintenance (PR208000) form, three US state tax settings that are specific to an individual employee were shown as company-level settings for every state with income tax:
- State Nonresident Certificate on file for this employee
- Employee is a resident of the state or location
- Additional state withholding amount.
These settings should have been available only on the Employee Payroll Settings (PR203000) form.
Fix Description: The three settings are now classified as employee-level settings for all US states. The same defect also caused the FEIN display option to be ignored for the Override Rate setting of the paid family leave taxes and the Rate setting of the Delaware unemployment tax; these settings are now displayed with the FEIN as intended.
Deduction and Benefits
Deductions – effective September 24, 2026
Deductions with a per-pay-period limit were being deducted from every paycheck an employee received in a pay period, instead of just once.
If an employee had a deduction limited to once per pay period but received multiple paychecks in that period (e.g., a regular paycheck plus a bonus check), the deduction was incorrectly taken from each paycheck. This has been fixed; the deduction is now applied only once per pay period, from the regular paycheck when it is calculated first.
Trump Account – effective July 4, 2026
We've added Dependent Custodial Account as a new built-in Code Type: SECTION 128 to the Deduction and Benefit Codes (PR101060) form under US Tax Settings to support the IRC Section 128 Trump Account program established under the One Big Beautiful Bill Act.
How It Works:
- Who can contribute: Both employers and employees can contribute to a Trump Account.
- Employer contribution cap: The tax engine enforces a $2,500 per employee, per year cap on employer contributions.
- Multiple plans: If an employee is enrolled in multiple Dependent Custodial Account plans, the $2,500 annual employer cap is distributed proportionally across those plans.
- Overall contribution limit: The tax engine does not enforce the overall $5,000 annual contribution limit per child — this should be managed outside the engine.
Note: IRS Guidance can be found : Treasury, IRS issue guidance on Trump Accounts
Educational Assistance – effective January 1, 2026
We've added Employer-only educational assistance as a new built-in Code Type: EDUCATION to the Deduction and Benefit Codes (PR101060) form under US Tax Settings to support IRC Section 127:
| Benefit Type | Description |
| Educational Assistance | Tuition, fees, books, and supplies |
| Educational Assistance Loan Repayment | Student loan repayment under Section 127 (as expanded by OBBBA) |
Both types accept employer contributions only. There is no employee contribution path, and neither is a Section 125 cafeteria benefit.
Employer Contribution Limit
- A shared $5,250 per employee, per year employer exclusion applies across both benefit types combined. Each type does not get its own separate $5,250.
- If multiple Section 127 plans run in the same pay run and the combined requested amount exceeds remaining headroom, the excludable amount is spread proportionally across the plans based on contribution size.
- For pay dates before January 1, 2026, the exclusion cap is $0 — the full employer contribution is treated as over-cap and is taxable everywhere.
- Clients may also configure a custom annual limit below $5,250. Amounts above that client-set limit are treated as over-cap, even though the statutory cap is higher.
- Contributions above the applicable cap are fully taxable in every wage base (federal and state).
Federal Treatment (Within the $5,250 Cap)
Employer contributions are excluded from FIT, FICA (Social Security), Medicare, and FUTA subject wages.
State Treatment
State taxability is jurisdiction-specific:
- New Jersey: SIT taxes the contribution (both tuition and loan repayment); SUI excludes it up to the cap.
- Pennsylvania: Does not conform to Section 127. SIT and employer SUTA tax the full contribution for both benefit types. Note: The employee SUI contribution currently still excludes the within-cap amount; The tax engine has confirmed this as a defect scheduled for correction in a future release.
- Arizona, California, Hawaii, Indiana, Massachusetts, Michigan, Minnesota, North Carolina, South Carolina, Vermont, Wisconsin: These 11 states don't conform to the OBBBA loan-repayment exclusion. They tax the loan-repayment type for SIT while still excluding tuition. Each state's SUI rules apply separately.
- 33 SUI jurisdictions that don't adopt the federal wage exclusion (e.g., Texas, Indiana) tax the within-cap contribution for SUI from dollar one, rather than only the amount over the cap.
- Other conforming SIT jurisdictions exclude the within-cap amount from SIT. SUI follows each state's own unemployment wage rules (including the 33 jurisdictions noted above).
Note: These benefits affect subject wages only — the engine includes or excludes the employer contribution from each tax's wage base. They do not alter withholding rules or calculation methods.
Examples
| Scenario | Setup | Subject Wages | Result |
| Within cap (conforming) | New York; $5,000 wages; $5,250 Educational Assistance (at annual cap) | FIT = $5,000; SIT = $5,000 | Full contribution excluded; wages unchanged |
| Over cap | Ohio; $5,000 wages; $6,000 Educational Assistance ($750 over cap) | FIT / FICA / Medicare / SIT = $5,750 | Only the $750 excess is added to subject wages everywhere |
| Pennsylvania (nonconforming) | Pennsylvania; $3,000 wages; $1,000 Educational Assistance (under cap) | FIT = $3,000; SIT = $4,000; ER SUI = $4,000 SUI $3000 | Federal excludes; PA taxes the full contribution for SIT and SUI |
| Loan repayment (OBBBA nonconforming SIT) | Massachusetts; $4,000 wages; $600 tuition + $400 loan repayment (both under cap) | FIT = $4,000; SIT = $4,400; SUI = $4,000 | Federal and SUI exclude both; SIT excludes tuition, includes loan repayment |
Arkansas
Texarkana Residents’ State Income Tax
Previously, when the Texarkana Resident miscellaneous parameter on Employee Payroll Settings (PR203000) on the Tax Settings tab was set for an Arkansas resident, Arkansas SIT calculated a $0 tax but was not marked exempt. As a result, gross, subject, and gross subject wages were returned unaffected, as the Zero Wage Amounts and Zero Subject Wage Amounts global options had no effect on this tax.
Now that the tax is properly marked exempt, it can honor the existing global wage options:
- Zero Wage Amounts – zeros gross, subject, and gross subject wages
- Zero Subject Wage Amounts – zeros subject wages only
- If neither option is set, wages are returned unchanged (same as before)
Colorado
Income Tax – effective September 24, 2026
Select to disable state-mandated rounding. Use this option with caution because it may result in amounts that differ from those expected by the state.
A new parameter called "Disable Mandatory Rounding" is now available for states that require the rounding of State Income Tax (SIT) to the nearest whole dollar. Disabling this feature may result in SIT amounts that do not align with the expectations of the state agency. Please enable this parameter only if you have a specific business reason and are responsible for the compliance decision.
Paid Family and Medical Leave (PFML) – effective September 24, 2026
A new Out-of-State Wages checkbox is now available. Select this checkbox to include wages the employee earned outside the taxing state when calculating the subject wages for that state.
Default behavior (no action required)
Existing calculations are unchanged unless you update this setting: unchecked by default — FLI is calculated on in-state wages only.
How it works
For employees who earn wages in more than one state:
- Checked — FLI subject wages include wages earned in other states.
- Unchecked — FLI subject wages include only wages earned in the taxing state.
The employee and employer FLI share the same subject-wage base, so the employee-side tax will move with the employer-side tax when you change this setting.
Why this matters for autoAdjust
This setting is especially useful for customers using autoAdjust. When the checkbox is unchecked, autoAdjust will not "catch up" on out-of-state year-to-date wages — preventing over-collection for employees who earned wages in another state earlier in the year and later moved to a state with this FLI tax.
Delaware
Paid Family and Medical Leave (PFML) – effective September 24, 2026
A new Out-of-State Wages checkbox is now available. Select this checkbox to include wages the employee earned outside the taxing state when calculating the subject wages for that state.
Default behavior (no action required)
Existing calculations are unchanged unless you update this setting: unchecked by default — FLI is calculated on in-state wages only.
How it works
For employees who earn wages in more than one state:
- Checked — FLI subject wages include wages earned in other states.
- Unchecked — FLI subject wages include only wages earned in the taxing state.
The employee and employer FLI share the same subject-wage base, so the employee-side tax will move with the employer-side tax when you change this setting.
Why this matters for autoAdjust
This setting is especially useful for customers using autoAdjust. When the checkbox is unchecked, autoAdjust will not "catch up" on out-of-state year-to-date wages — preventing over-collection for employees who earned wages in another state earlier in the year and later moved to a state with this FLI tax.
Idaho
Income Tax – effective July 23, 2026
The value of an annual withholding allowance for the Idaho State Tax has decreased to $0 (from $3,868), following the sunset of the Idaho Child Tax Credit. The withholding tax rate remains 5.3%. Idaho’s updated Percentage Computation Method tables also raise the point at which withholding begins, from $15,000 to $16,100 for single and head of household filers, and from $30,000 to $32,200 for married filers. Withholding for pay dates before July 23, 2026 is unaffected. Idaho revises its tables as needed rather than at the start of a year, so withholding does not need to be adjusted back to the beginning of the year. The Idaho W-4 has not been updated with the publication of the new table.
Income Tax – effective September 24, 2026
Select to disable state-mandated rounding. Use this option with caution because it may result in amounts that differ from those expected by the state.
A new parameter called "Disable Mandatory Rounding" is now available for states that require the rounding of State Income Tax (SIT) to the nearest whole dollar. Disabling this feature may result in SIT amounts that do not align with the expectations of the state agency. Please enable this parameter only if you have a specific business reason and are responsible for the compliance decision.
Iowa
State Unemployment Tax – effective January 1, 2027
The wage base has increased from $20,400 to $21,100. The new-employer rate remains 1.0%.
Louisiana
Income Tax – effective September 24, 2026
The Standard Deduction field has been removed from the Employee Payroll Settings (PR203000) form. Louisiana no longer uses standard deductions in its state income tax calculation, so this field is no longer applicable.
Kansas
State Unemployment Tax – effective January 1, 2027
The wage base has increased from $15,100 to $15,700. The new-employer rate remains 1.75%.
This change was confirmed directly with the Kansas Department of Labor and is not yet published publicly.
Maine
Income Tax – effective September 24, 2026
Select to disable state-mandated rounding. Use this option with caution because it may result in amounts that differ from those expected by the state.
A new parameter called "Disable Mandatory Rounding" is now available for states that require the rounding of State Income Tax (SIT) to the nearest whole dollar. Disabling this feature may result in SIT amounts that do not align with the expectations of the state agency. Please enable this parameter only if you have a specific business reason and are responsible for the compliance decision.
Massachusetts
Supplemental Withholding – effective September 24, 2026
Supplemental flat-rate withholding now reduces supplemental wages by the FICA/Medicare/retirement deduction, capped at the $2,000 annual maximum, before applying both the 5% tax rate and the 4% surtax. This $2,000 cap is shared across regular wages, year-to-date payments, and the current supplemental payment; it is not applied separately to each calculation. When a paycheck includes both regular and supplemental Massachusetts wages, the regular calculation consumes the cap first, and the supplemental calculation claims only the remaining amount.
Previously, Massachusetts supplemental withholding handled the deduction inconsistently within the same calculation: the 5% tax rate was applied to gross supplemental wages with no deduction subtracted, while the 4% surtax subtracted the deduction in full, uncapped.
Clients using Massachusetts supplemental withholding should expect withholding amounts to change for employees who receive supplemental wages and whose FICA/Medicare/retirement deduction has not yet been fully consumed.
Minnesota
Paid Family and Medical Leave (PFML) – effective September 24, 2026
When Qualified Small Employer is checked but Number of Employees is omitted or 0 on MN ER FLI on the Tax Maintenance (PR208000) under Tax Codes ~ Tax Settings, the engine now applies the small-employer rate.
Previously, the engine defaulted Number of Employees to 31 when it was 0 or omitted, even when Qualified Small Employer was checked, causing the regular rate to apply instead of the small-employer rate.
Now, pay runs with Qualified Small Employer checked and no explicit Number of Employees use the qualified small-employer rate. Pay runs with an explicit number of employees, or with Qualified Small Employer unset or unchecked, are unaffected.
Mississippi
Income Tax – effective September 24, 2026
Select to disable state-mandated rounding. Use this option with caution because it may result in amounts that differ from those expected by the state.
A new parameter called "Disable Mandatory Rounding" is now available for states that require the rounding of State Income Tax (SIT) to the nearest whole dollar. Disabling this feature may result in SIT amounts that do not align with the expectations of the state agency. Please enable this parameter only if you have a specific business reason and are responsible for the compliance decision.
Missouri
Income Tax – effective September 24, 2026
Select to disable state-mandated rounding. Use this option with caution because it may result in amounts that differ from those expected by the state.
A new parameter called "Disable Mandatory Rounding" is now available for states that require the rounding of State Income Tax (SIT) to the nearest whole dollar. Disabling this feature may result in SIT amounts that do not align with the expectations of the state agency. Please enable this parameter only if you have a specific business reason and are responsible for the compliance decision.
Montana
Income Tax – effective September 24, 2026
Select to disable state-mandated rounding. Use this option with caution because it may result in amounts that differ from those expected by the state. Note: Montana rounds to the nearest dollar rather than rounding up.
A new parameter called "Disable Mandatory Rounding" is now available for states that require the rounding of State Income Tax (SIT) to the nearest whole dollar. Disabling this feature may result in SIT amounts that do not align with the expectations of the state agency. Please enable this parameter only if you have a specific business reason and are responsible for the compliance decision.
Nevada
Career Enhancement Program Tax – effective January 1, 2027
The wage base has increased from $43,700 to $45,400. The tax rate remains 0.05%.
New York
Paid Family and Medical Leave (PFML) – effective September 24, 2026
A new Out-of-State Wages checkbox is now available. Select this checkbox to include wages the employee earned outside the taxing state when calculating the subject wages for that state.
Default behavior (no action required)
Existing calculations are unchanged unless you update this setting: checked by default — FLI is calculated on wages earned in all states.
How it works
For employees who earn wages in more than one state:
- Checked — FLI subject wages include wages earned in other states.
- Unchecked — FLI subject wages include only wages earned in the taxing state.
Why this matters for autoAdjust
This setting is especially useful for customers using autoAdjust. When the checkbox is unchecked, autoAdjust will not "catch up" on out-of-state year-to-date wages — preventing over-collection for employees who earned wages in another state earlier in the year and later moved to a state with this FLI tax.
Example (New York, 2026 rate of 0.432%): An employee has $10,000 in YTD wages earned in Indiana, then moves to New York and earns $1,000 there.
| Setting | Wages taxed | Tax charged |
| Unchecked | $1,000 (NY only) | $4.32 |
| Checked | $11,000 (all states) | $47.52 |
North Carolina
Income Tax – effective September 24, 2026
Select to disable state-mandated rounding. Use this option with caution because it may result in amounts that differ from those expected by the state.
A new parameter called "Disable Mandatory Rounding" is now available for states that require the rounding of State Income Tax (SIT) to the nearest whole dollar. Disabling this feature may result in SIT amounts that do not align with the expectations of the state agency. Please enable this parameter only if you have a specific business reason and are responsible for the compliance decision.
Ohio
Income Tax – effective August 1, 2026
The withholding calculation has been updated per House Bill 96:
- The taxable wage bracket amounts for the optional computer method have been updated.
- The withholding formula does not include a standard deduction.
- The value of an exemption remains $650.
- The supplemental compensation withholding rate remains 2.75%.
- The OH Employee’s Withholding Exemption Certificate remains unchanged.
Louisville City Tax – effective October 1, 2026
RITA will administer the tax. The tax rate remains 2.0%, and the credit for taxes paid to other municipalities remains 60%. The maximum credit decreases from 2.0% to 1.2%.
Maderia City Tax – effective January 1, 2027
The tax credit for taxes paid to other municipalities has increased from 60.0% to 70.0%, up to the existing maximum credit of 1.0%. The tax rate remains 1.0%.
Woodville City Tax – effective September 24, 2026
The tax has been added with a 1.0% rate. No credit is allowed for taxes paid to other municipalities.
This tax applies to individuals who live or work in the Village of Woodville and is based on taxable income such as wages, salaries, tips, and commissions. Returns are filed quarterly with the Village of Woodville, and a return must be submitted even for quarters with no wages to report.
Oklahoma
Income Tax – effective September 24, 2026
Select to disable state-mandated rounding. Use this option with caution because it may result in amounts that differ from those expected by the state.
A new parameter called "Disable Mandatory Rounding" is now available for states that require the rounding of State Income Tax (SIT) to the nearest whole dollar. Disabling this feature may result in SIT amounts that do not align with the expectations of the state agency. Please enable this parameter only if you have a specific business reason and are responsible for the compliance decision.
Oregon
Workers’ Benefit Fund Assessment – effective September 24, 2026
A new miscellaneous parameter, ER Pickup Taxability, is now available for the Oregon Workers' Benefit Fund Assessment - Employer tax (OR ER WC) on Tax Maintenance (PR208000) under Tax Codes.
Setting: Select to treat the employee portion of the tax absorbed by the employer as taxable imputed income for Oregon state and local taxes.
How It Works:
When this parameter is enabled and ‘Full tax amount is covered by the employee’ = true is configured under Tax Settings, the employee portion of the tax absorbed by the employer is treated as taxable imputed income for the following Oregon state and local taxes:
- Eugene Community Safety Payroll Tax – Employee
- Oregon State Tax
- Oregon State Unemployment Tax
- Oregon Paid Family and Medical Leave – Employee
- Oregon Paid Family and Medical Leave – Employer
- Oregon Transit Tax
- Transit District Employer Taxes
- Metro Supportive Housing Services Income Tax
- Multnomah County Preschool for All Income Tax
Washington
State Unemployment Tax – effective January 1, 2027
The wage base has increased from $78,200 to $82,000. The new-employer rate remains 1.0%.
Employment Administration Fund Tax - effective January 1, 2027
The wage base has increased from $78,200 to $82,000.
West Virginia
Income Tax – effective September 24, 2026
Select to disable state-mandated rounding. Use this option with caution because it may result in amounts that differ from those expected by the state.
A new parameter called "Disable Mandatory Rounding" is now available for states that require the rounding of State Income Tax (SIT) to the nearest whole dollar. Disabling this feature may result in SIT amounts that do not align with the expectations of the state agency. Please enable this parameter only if you have a specific business reason and are responsible for the compliance decision.
