Year-End HR Checklist for Employers

How to Close 2025 Smoothly and Start 2026 Strong

As the year draws to a close, HR and payroll teams face a packed to-do list of tax filings, compliance deadlines, and employee updates. A well-organized year-end process not only prevents errors but also sets the tone for a smooth start to the new year.

This checklist covers the essential tasks HR professionals and employers should complete to wrap up 2025 and prepare for 2026 with confidence.

1. Verify Key Year-End Dates and Filing Deadlines

Mark these important federal deadlines early so nothing slips through the cracks:

• Form W-2 and 1099 distribution: Employees must receive forms by January 31, 2026.
• Form 940 (FUTA): Due January 31, 2026 (or February 10 if deposits are current).
• Form 941 (4Q): Due January 31, 2026.
• ACA filings:
  • Forms to employees by March 2, 2026.
    
    
• State unemployment and withholding returns: Dates vary by state; confirm your 4th-quarter and annual due dates in advance.

Creating a central compliance calendar helps you visualize all deadlines by entity and location. Because many deadlines and rules vary by state or local jurisdiction, confirm applicable dates in each location you operate.

2. Audit Employee Data and Records

Before generating year-end forms, confirm that all employee information is correct:

• Legal name matches Social Security card
• Social Security number and address are accurate
• Tax withholding elections are current
• Marital status, dependents, and benefit selections reflect any 2025 life changes
• Terminations are processed and final pay recorded

Clean data ensures accurate W-2s, reduces corrections, and avoids costly reprints.

3. Reconcile Payroll for the Year

Perform a final reconciliation to verify:

• Gross-to-net calculations match payroll registers
• Taxable wages align with quarterly filings
• Benefit deductions (health, 401(k), FSA/HSA) match vendor reports
• Manual checks, voided payments, and adjustments are captured
• Bonuses and commissions are assigned to the correct tax year

Run a payroll summary report for each EIN and review totals for consistency across all quarters.

4. Update Employee Tax Elections and Pay Rates

The new year often brings federal and state tax-table updates, minimum-wage changes, and merit increases.

• Review new federal and state withholding tables effective January 1, 2026.
• Confirm new state and local minimum wage rates where applicable.
• Apply approved pay adjustments or performance raises in the first payroll of 2026.
• Encourage employees to review their Form W-4 elections.

5. Confirm Benefit Deductions and Plan Limits

Benefit limits and rates often change annually. Review the anticipated 2026 limits (subject to final IRS confirmation).:

*Projected 2026 elective deferral limit for 401(k)/403(b) is $24,500 (up from $23,500 in 2025). Catch-up contributions for ages 50+ are projected at $8,000 in 2026.*

Reconcile deductions against provider invoices and confirm that employer matches and contributions have been submitted correctly.

6. Prepare for Open Enrollment and ACA Reporting

Use the year-end period to ensure benefit data and ACA reporting are aligned:

• Verify coverage start/end dates for all employees.
• Validate dependent information and eligibility.
• Audit affordability calculations for full-time employees.
• Run a compliance test for ACA measurement periods and hours.

Early verification minimizes 1095-C corrections and reduces IRS filing risk.

7. Review Paid Leave Balances and PTO Policies

• Reconcile remaining vacation, PTO, or sick balances before year-end.
• Pay out or carry over balances according to policy and state law.
• Reset accrual banks and verify accrual formulas for 2026.

For states or cities with paid sick leave mandates, ensure rates and balances comply with new thresholds.

8. Conduct a Year-End Compliance Review

Now is the ideal time to confirm that policies and practices align with current laws:

• Review wage-and-hour classifications (exempt vs non-exempt).
• Check state and local updates to minimum wage, paid-leave, and overtime regulations.
• Confirm workplace posters and notices are current for 2026.
• Verify that employee handbooks include updated EEOC, FMLA, and state-specific policies.

Keep documentation of your annual review as part of your compliance record.

9. Close Out and Archive 2025 Payroll

When the final payroll of 2025 is complete:

• Back up all payroll and tax data securely.
• Archive quarterly and annual reports.
• Store employee and contractor payment records for at least four years (or longer, if required by state).
• Lock prior-year data to prevent edits once filings are complete.

Archiving ensures you have full audit trails in the event of IRS or state inquiries.

10. Evaluate Processes and Plan for Next Year

After the dust settles, schedule a brief post-mortem:

1. Identify what worked well and what caused delays.
2. Document process improvements for 2026.
3. Train staff on new tools or reporting enhancements.
4. Set quarterly checkpoints to prevent a last-minute year-end rush next time.

Year-End HR Checklist Summary

Final Thoughts

Year-end can feel overwhelming, but a structured checklist keeps everything on track—reducing stress, ensuring compliance, and freeing up time for strategic planning in the new year.

CTR Payroll | HR provides payroll, tax, and compliance expertise that helps employers stay organized and audit-ready through every year-end. Our team monitors changing wage laws, benefit thresholds, and reporting rules so you can focus on your people, not paperwork.

✴️Contact CTR Payroll | HR today to see how we can simplify year-end and beyond. 

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