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Fans of the 1996 romantic comedy Jerry Maguire might recall one of the most famous lines from the film when Jerry (Tom Cruise) says to Dorothy Boyd (Renee Zellweger): “You complete me.”
In other words, there was something missing from Jerry’s life, and his relationship with Dorothy and her son showed him just what he was missing out on by focusing so much of his time on one area of his life—his job. By letting them into his life, he gained new insights into what was truly important. It doesn’t get much more holistically focused than that.
At PrismHR, we believe taking a comprehensive approach to taxes takes the burden of keeping up with new and ever-changing regulations off you. It also allows you to focus on other parts of your business—namely delighting your clients and talking with prospects.
Nobody would mistake payroll taxes for a budding romance … but the benefit of a comprehensive tax solution can be a lovely thing that can lead to a long-term relationship with your clients.
So to paraphrase Jerry, let us help you help them by keeping up to date on the latest tax laws coming down the pike or potentially coming to a city or state near you.
You Had Me at Hello
Hello! With a new administration coming in, it’s clear that taxes will be a key focus in 2025. They also could be a potential pain point for businesses regardless of what the makeup of the 119th Congress looks like. Also, how much proposed tariffs will factor into the taxation equation for 2025 remains to be seen.
Here are some of the things we’re keeping an eye on for 2025. We’ll start with the 2017 Tax Cut and Jobs Act, which is set to expire. As the Tax Policy Center explains, “The TCJA permanently lowered the corporate income tax rate from 35 percent to 21 percent, but it also reduced the value of some business tax breaks to help keep the lost revenue within the Senate’s budget reconciliation parameters.”
And there’s no need to get salty, but the state and local tax (SALT) deduction is on the table. President-elect Donald Trump is reportedly seeking to repeal the $10,000 cap on SALT deductions. SALT is actually part of the TCJA, and it was signed into law during the first Trump administration.
Also on the “Don’t Have to Show Me the Money” front is taxes on tipping, which we discussed in the run-up to the election. Both presidential candidates promised they would exempt tip income from taxation, so tip earners could enjoy a bigger slice of the pie.
You Can Compete with That …
On the state side, the Tax Foundation has a good overview of what’s going on with state taxes for 2025. In case you were wondering, Wyoming, South Dakota and Alaska are ranked as the top three states in the 2025 index in terms of how they structure their tax systems. California, New Jersey and New York were ranked 48th, 49th and 50th, respectively, based on a number of reasons, including their complex tax structure and higher tax rates.
Speaking of New York taxation complexities, coming to an Empire State near you, is a heaping helping of significant changes to quarterly tax reporting. Specifically, starting in April 2025, you will be required to file all three components of the NYS-45 together on one tax return, and, on Part C, separate state from local income tax withholding by employee.
New York is also well-known for its “Convenience of the Employer” rule, which treats the income of out-of-state remote workers who report to a New York-based company, as New York income, if the employee is working remotely for their convenience. With a rise in remote employment, New Jersey instituted a similar rule last year, which applies to remote workers in states like New York, which have their own rule.
California was the first state to establish a Paid Family Medical Leave program in 2004, offering benefits when a health condition causes an employee to miss work, whether it’s because of their own health issues or a family member’s. From 2025 through 2026, programs will also begin in Maine, Delaware, Maryland and Minnesota. This will bring the number of U.S. jurisdictions with mandated paid family medical leave to 14, including New York and New Jersey.
“States do not institute tax policy in a vacuum. Every change to a state’s tax system makes its business tax climate more or less competitive compared to other states and makes the state more or less attractive to business,” according to the Tax Foundation.
A comprehensive tax solution should pay as much attention to state initiatives as federal ones. Things get even more complicated for PEOs or Payroll Service Bureaus that work with clients in multiple states, so that’s why PrismHR constantly monitors tax regulations for you and your clients.
Subplot: Detroit is poised to accept cryptocurrency for taxes and city fees. Who had that on their bingo cards? Show of ✋s? Sorry, we don’t handle crypto payments, but we’ll keep an eye out for further developments just in case it’s the start of a trend.
We Will Not Rest …
According to a recent National Association of Professional Employer Organizations (NAPEO) survey, the three biggest ways PEOs help small and medium-sized businesses (SMBs) are by giving them:
- Access to Fortune 500-like benefits
- A boost in retirement savings plan participation
- Assistance from HR professionals
That last benefit is not just a bonus for organizations wanting to stay in compliance with any tax-related compliance issues, but a “show me the money” kind of play for any HR outsourcer.
As an HRO, you work in a world filled with tough competitors. So having someone else available to worry about tax-related payroll changes should give you the strategic advantage you need to compete. After all, as Dorothy says in the film: “Maybe love shouldn’t be such hard work.” We would add, keeping up with tax changes shouldn’t either, but point taken.
Let us complete your HRO offering with our comprehensive tax solution.
Our technology helps more than 100,000 businesses stay in compliance while removing the guesswork for HR outsourcers (HROs) through our solutions and decades of experience and expertise. Learn more about PrismHR.
