Article
Preparing for 2026: Five payroll limits to watch this new year
Oct. 23, 2025 · Authored by Dena Forgey, Naresh Palani
Before you know it, the holidays will be upon us! Amidst the activities of the coming months, there are also payroll and benefit topics to put on your radar. As we prepare for a new year, we made you a list to check twice, ensuring you and your organization start 2026 informed and up to date with the coming changes.
Each year, contribution and tax limits change. As a best practice, the payroll and benefit departments in every organization should review and assess the impact on their individual processes and configurations. The figures below are projected until the IRS and Social Security Administration release the final data.
Pension contribution limits
- 401k, 403b and 457 contributions will increase $1,000 for a maximum of $24,500.
- Over 50 catchups for these plans will increase $500 to $8,000.
- As a part of Secure 2.0, if an employee is 60 - 63 years of age, an additional “Super” catch-up provision of $11,250 applies. Individuals with Federal Insurance Contributions Act (FICA) income of $145,000 or greater in 2025 are considered high wage earners and will be required to make the additional catch up to an after-tax Roth instead of a pretax deferral.
- The combined employee + employer contributions are projected to increase to $72,000.
- Verify these limits in Oracle by navigating to the calculation value definitions under the quick actions.
Social security wage limit
- While the social security rate of 6.2% will not change, the covered compensation will change to $183,600. This is an annual increase of $7,500. The maximum social security tax will be $11,383.20 for employees and employers in 2026.
- The Medicare rate remains the same at 1.45% with no limit on covered compensation.
- Additional Medicare Tax rate remains at 0.9% for wages over $200,000 if filing single and $250,000 for joint filers.
- Oracle’s best practice is to test the new limits in a non-production environment in January.
Health Savings Account (HSA limits)
- Self-only election limit has increased to $4,400.
