Payroll Deductions in 2025: What Can and Cannot Be Deducted from an Employee's Paycheck (SSVL09)

This webinar includes critical OBBBA (One Big Beautiful Bill Act) payroll deduction updates, addressing above-the-line federal tax deductions for tipped and overtime income—claimed at year-end on personal tax returns rather than via payroll withholding—for eligible employees. The session will also cover the higher pre-tax annual limits for dependent care flexible spending accounts (FSAs), plus major updates to fringe benefit exclusions including transportation, moving expenses, and employer contributions to so-called “Trump accounts.” Employers and payroll professionals will learn practical strategies for staying compliant amid these wide-reaching federal changes—and for reconciling them with diverse and sometimes divergent state and local deduction rules.

This webinar explores the intricate rules governing deductions from employees’ wages, covering both regular paychecks and final payments. Understanding these regulations will help you avoid penalties and ensure adherence to federal, state, and local laws.

Learning Objectives

By attending, participants will learn to:

  •  Distinguish between mandatory and voluntary payroll deductions under federal and state laws.
  •  Apply the latest OBBBA rules regarding above-the-line federal income tax deductions for tips and overtime pay (including reporting requirements and year-end vs payroll processes).  
  •  Manage increased employee pre-tax contribution limits for dependent care FSAs—now $7,500 per year from 2026. 
  •  Comply with updated federal limitations for child support withholding, tax levies, and other garnishments.
  •  Address OBBBA changes affecting fringe benefit exclusions, such as the elimination of qualified transportation (parking or transit), with limited exceptions, and new treatment of moving expenses and other employer-provided benefits. 
  •  Evaluate policies and compliance risks surrounding wages withheld for shortages, breakage, uniform costs, advanced vacation pay, and employee loans—incorporating new federal and state parameters introduced by OBBBA.
  •  Recognize the importance of thoroughly documenting wage deductions and clear employee communication—especially for benefits and deductions newly impacted by OBBBA.
  •  Navigate anti-wage theft laws and compliance challenges created by conflicting federal, state, and local requirements in the post-OBBBA environment.

Who Will Benefit:

  •  Payroll Executives, Managers, Administrators, and Practitioners
  •  Human Resources Executives and Administrators
  •  Accounting Personnel responsible for payroll functions
  •  Business Owners, Executive Officers, and Departmental Managers
  •  Legal Professionals and Attorneys specializing in employment law
  •  Any professional responsible for payroll compliance and wage payments