PayrollOrg Releases Sample Employee Letter to Support 2026 Tax Witholding Updates

PayrollOrg® (PAYO) has created a sample employee communication tool to help payroll professionals guide staff through upcoming income tax withholding changes tied to Public Law 119-21, known as the One, Big, Beautiful Bill Act (OBBBA).

Beginning with the 2026 tax year, employees who wish to account for new OBBBA-related deductions in their income tax withholding must submit a new 2026 Form W-4, Employee’s Withholding Certificate. These updates are designed to reflect several new or expanded tax benefits available under the law.

OBBBA introduced multiple deductions and tax changes that may impact employees’ withholding decisions, including:

New income tax deductions for qualified overtime compensation, tips and qualified passenger vehicle loan interest.
An enhanced deduction for individuals 65 and older.
An increase to the standard deduction and the child tax credit.
A higher limit on the itemized deduction for state and local taxes.

To assist employers in communicating these updates, PayrollOrg has developed a customizable sample letter titled “Sample Letter Explaining 2026 Tax Withholding Updates to Employees.” The letter provides clear, general guidance employees can use to understand the steps required to update their withholding elections for 2026.

The sample letter is available for download on PayrollOrg’s OBBBA Payroll Hot Topics webpage and can be tailored to meet organizational needs.

Employers seeking additional resources on federal and state payroll compliance can also reference Payroll Source Plus to stay current on laws, regulations and best practices affecting payroll operations.