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What’s New for Payroll Year End 2025?

Year end payroll processing brings no shortage of questions – especially with evolving regulations, reporting requirements, and system updates related to overtime.

We’ll review what organizations using Microsoft Dynamics GP need to know to successfully close payroll for 2025 and prepare for 2026. 

Below is a recap of the key updates, reminders, and tools to help ensure a smooth year end payroll process.

Key Highlights for Dynamics GP Users

Microsoft Dynamics GP 18.8 includes the all-inclusive 2025 Year End Update (released the week of December 5). For Canadian customers, updates continue through December and into January 2026. 

Payroll Form Updates (or Lack Thereof) 

Good news! There are no major payroll form changes for 2025: 

  • No W-2 or W-3 changes 
  • No EFW2 magnetic media changes 
  • No Payables form changes 
  • No ACA 1095-C changes 

However, there are fixes and minor updates worth noting: 

  • Medicaid waiver payment updates 
  • Improved 1099 and W-2 form labeling 
  • 1099-NEC now prints the full four-digit year 

Canadian payroll users should be aware of RL-1, T4, and T4A XML and form updates. 

Electronic Filing Is More Important Than Ever 

The IRS continues to push employers toward electronic filing for W-2s, 1099s, and other forms. While Dynamics GP supports W-2 electronic filing, Payables 1099s are not filed electronically from GP, making preparation and third-party tools critical. 

Be sure to review filing requirements early to avoid last-minute issues. 

SECURE Act 2.0: What Payroll Teams Need to Know 

Several key SECURE Act 2.0 changes are approaching, with implementation beginning as early as 2026. 

Important Changes to Watch: 

  • Mandatory Roth catch-up contributions for employees age 50+ earning $150,000 or more 
  • Enhanced catch-up contributions for employees ages 60–63 (up to 150% of the standard limit) 
  • Full enforcement begins in 2027, with good-faith implementation allowed in 2026 

Payroll System Requirements 

To support these changes, payroll systems must: 

  • Track compensation thresholds accurately 
  • Automatically shift eligible catch-up contributions to Roth 
  • Support corrected W-2 reporting 
  • Manage contribution types by plan year 
  • Handle errors and corrections properly 

Managing SECURE Act Changes in Dynamics GP 

Using core GP, payroll teams can: 

  • Install Payroll Year End Wage Views 
  • Use SmartList Designer SQL views for enhanced reporting 
  • Track compensation and contribution types manually 

New Tool Spotlight: RothRoll 

RothRoll is a new tool designed to help manage Roth catch-up requirements under SECURE Act 2.0. It assists with identifying employees who meet age and compensation thresholds and managing Roth contribution requirements.

roth roll employee setup under secure act 2.0

Overtime Premium Reporting on W-2s 

Overtime premium reporting continues to be a challenge for many organizations. 

How OVT Premium Works 

The OVT Premium tool determines overtime, double-time, and tip-related pay codes based on GP Pay Type setup.  

OVT Premium will: 

  • Identify eligible pay codes 
  • Calculate only the premium portion (the 0.5 overtime factor) 
  • Post values directly to W-2 records 

overtime premium determines paycodes

overtime premium setup window displays in dynamics gp

Payroll teams can: 

  • Configure where amounts appear on W-2s 
  • Validate results using new SmartLists 
  • Review and edit W-2 information before filing 

view and edit w2 information in ovt premium for overtime and payroll reporting

Payroll Year End Checklist for 2025 

Before closing payroll, make sure you: 

  • Complete all pay runs for the year 
  • Finish monthly and quarterly closes 
  • Back up your GP system 
  • Install the 2025 Year End Update (optional but recommended) 
  • Create and verify payroll year end files 
  • Review W-2, 1095, and 1099-R data 
  • Print W-2s and W-3 forms 
  • Install the 2026 payroll tax update after year end close 

Optional steps include archiving inactive employees and closing fiscal periods. 

Final Reminders for a Smooth Close 

  • You don’t need to wait to close fiscal years – historical postings are still allowed 
  • Double-check posting types before closing 
  • Review the Year End Closing window carefully 
  • Verify “Amounts Since Last Close” to avoid reporting issues 

Plan Ahead for 2026 

The first 2026 payroll tax update releases in December 2025 and should only be installed after your final 2025 payroll and year end close. 

Preparing early – especially for SECURE Act changes and electronic filing requirements – can save considerable time and stress later. 

Need Help with Payroll Year End or Dynamics GP? 

If you have questions about payroll year end, overtime premium reporting with OVT Premium, or GP tools that can simplify the process, our team is here to help. 

Contact Us: 

Sales and Solutions: sales@iscorp.biz  

Support: support@iscorp.biz