As organizations move into 2026, HR continues to sit at the intersection of compliance, culture, technology, and people strategy. The role of HR is no longer just about policy enforcement or administrative support. It’s about guiding organizations through constant change while keeping people at the center of decision-making.
Over the next five weeks, we’ll be breaking down what employers need to know in the HR space for 2026. Each post will focus on one key area that is shaping how organizations operate, manage risk and support their people.
- New State Laws and Federal Regulations
- Compliance
- Employee Experience and Wellbeing
- Talent Acquisition and Retention
- HR Evolution & Technology
As we begin this series, we’re starting with one of the most immediate and high-impact areas for employers: new state laws and evolving federal regulations. Understanding where these requirements are headed, and how they intersect, is essential for organizations looking to stay compliant and plan confidently for the remainder of 2026.
Minimum Wage
Minimum wage increases at both the state and local level accounted for many of the changes for 2026.
Effective January 1, 2026, 68 jurisdictions – including 19 states and 49 localities – raised minimum wages. Below are a few notable changes:
- Michigan: Increased from $12.48 to $13.73 per hour, part of a phased plan that will reach $15.00 by 2027.
- Ohio: Raised its minimum wage from $10.70 to $11.00 per hour, with a corresponding increase to the tipped wage.
- Connecticut: Increased from $16.35 to $16.94, maintaining its position among the highest state minimum wages in the country.
- Washington: Raised to $17.13 per hour, continuing to hold the highest statewide minimum wage nationwide.
- Virginia: Increased from $12.41 to $12.77, reflecting an adjustment indexed to inflation.
Take a look at our minimum wage guide here or visit the DOL Wage and Hour Division site for more information.
State Exempt Employee Salary Thresholds
In addition to minimum wage changes, there are six states that have set a higher minimum salary for exempt employees than required by federal law. These include Alaska, California, Colorado, Maine, New York, and Washington. For example, Colorado’s threshold jumps to $57,784 per year, Maine’s hits $45,300.32 and Washington’s soars to $80,168.40. These thresholds vary by jurisdiction and sometimes by job category. The salary thresholds generally apply to executive, administrative, and professional employees, referred to as “EAP” employees. There are some exemptions, however. Generally, teachers, practicing doctors, and practicing lawyers—all of whom are considered professional employees—are exempt from the minimum salary requirements.
Tipped Employees
For 2026, eligible workers can deduct up to $25,000 of reported tips from federal income tax, phasing out at higher incomes (over $150,000 for single and $300,000 for joint). Eligible workers can also deduct up to $12,500 (or $25,000 jointly) of qualified overtime pay, also phasing out at higher incomes. These deductions are for tax years 2025 through 2028 only. It is important to note a few items of this federal change:
- Employees must report tips and overtime to their employer by the 10th of the month following receipt.
- Employers are required to report these amounts in new, specific boxes on Form W-2 using new codes.
- Beginning in 2026, employees can update their Form W-4 to account for these deductions, which may reduce withholding.
- Payroll (FICA) taxes still apply to tips and overtime, and some state and local taxes may still be owed.
Federal Mileage Reimbursement
As of January 1, 2026, the IRS standard mileage rate changed to 72.5 cents per mile driven for business purposes (up from 70 cents in 2025). This new mileage rate also applies to hybrid and electric vehicles. Use of this rate is optional for private employers, though it’s widely accepted as an easy and standard reimbursement rate for employees who use their personal vehicle for work. Learn more about this change in the IRS news release here.
Additional Federal Updates
- The IRS released 2026 federal income tax brackets, standard deductions, and cost-of-living adjustments. Visit the IRS page for more information.
- The Social Security taxable wage base will increase from $176,100 to $184,500 for 2026.
Contact the HR Experts at BCN Services
State laws and federal regulations may be the most visible HR change heading into 2026, but they aren’t the only one. In next week’s post, we’ll explore the realm of compliance and how changes in the new year will impact both employees and employers.
HR challenges are evolving—your strategy should too. Discover how BCN Services can support your people, compliance, and growth strategy by visiting www.bcnservices.com or contacting us at 734.412.7679.