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Technology & SaaS Companies: Year-End Payroll Checklist (2026)
Year-end payroll for technology companies is W-2s and any 1099-NEC to employees and contractors by January 31, the fourth-quarter 941 and annual 940, and the technology company items that decide which boxes are right: IRS Publication 15 (2026), IRS. BEG: $45 per employee per month inside the payroll software you already use, live in 3 to 5 days.
Technology company items that shape the W-2 and 1099s
The federal income tax withholding rate on supplemental wages, which include bonuses and commissions, is 22 percent, and 37 percent to the extent an employee's supplemental wages during the calendar year exceed $1 million. The 37 percent rate applies without regard to the employee's Form W-4.
A qualified small business may elect on Form 6765, filed with a timely income tax return, to apply up to $500,000 of its research credit against payroll tax for tax years beginning after December 31, 2022, up from $250,000. The credit is claimed on Form 8974 attached to Form 941, applied first against the employer share of social security tax up to $250,000 per quarter and then against the employer share of Medicare tax.
Illinois requires an employer to withhold Illinois income tax whenever it withholds federal income tax from compensation paid in Illinois, and compensation is paid in Illinois when the employee's services are localized there. The state also advises that an employer may have to register and withhold for another state in which the employee works or resides.
The January calendar
W-2s and W-3 to the SSA and copies to employees by January 31; 1099-NEC for each contractor paid $2,000 or more in the year, the threshold for tax years after 2025, by the same date; Form 940 and the fourth-quarter 941 by January 31 as well, with a 10-day extension where all deposits were on time. Ten or more information returns of any kind, counted together, must be filed electronically. For technology companies the reconciliation that matters is that the pay codes for equity compensation handling, remote employee multi-state tax and contractor classification landed in the right W-2 boxes for every employee.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- The federal income tax withholding rate on supplemental wages, which include bonuses and commissions, is 22 percent, and 37 percent to the extent an employee's supplemental wages during the calendar year exceed $1 million. The 37 percent rate applies without regard to the employee's Form W-4. [IRS Publication 15 (2026)]
- A qualified small business may elect on Form 6765, filed with a timely income tax return, to apply up to $500,000 of its research credit against payroll tax for tax years beginning after December 31, 2022, up from $250,000. The credit is claimed on Form 8974 attached to Form 941, applied first against the employer share of social security tax up to $250,000 per quarter and then against the employer share of Medicare tax. [IRS, Qualified small business payroll tax credit for increasing research activities]
- Illinois requires an employer to withhold Illinois income tax whenever it withholds federal income tax from compensation paid in Illinois, and compensation is paid in Illinois when the employee's services are localized there. The state also advises that an employer may have to register and withhold for another state in which the employee works or resides. [Illinois Department of Revenue Publication 130]
Read the full guide to how to handle year-end payroll and W-2s, and the rest of the technology company payroll library.
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Frequently Asked Questions
Year-end for technology companies: IRS Publication 15 (2026)
The federal income tax withholding rate on supplemental wages, which include bonuses and commissions, is 22 percent, and 37 percent to the extent an employee's supplemental wages during the calendar year exceed $1 million. The 37 percent rate applies without regard to the employee's Form W-4.
Year-end for technology companies: IRS, Qualified small business payroll tax credit for increasing research activities
A qualified small business may elect on Form 6765, filed with a timely income tax return, to apply up to $500,000 of its research credit against payroll tax for tax years beginning after December 31, 2022, up from $250,000. The credit is claimed on Form 8974 attached to Form 941, applied first against the employer share of social security tax up to $250,000 per quarter and then against the employer share of Medicare tax.
When are W-2s and 1099s due for a technology company?
January 31 for both, to the recipient and to the SSA or IRS. The 1099-NEC threshold is $2,000 for tax years after 2025, and 10 or more information returns of any type must be e-filed.
What does managed payroll cost for a technology company?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Equity compensation handling, remote employee multi-state tax and contractor classification are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Technology & SaaS Companies. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: IRS: Understanding Employment Taxes
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