Year-end processing in Sage HRMS requires careful attention to sequential tasks when closing out 2025 payroll activities and preparing your system for 2026. This guide outlines the essential steps for completing end-of-year (EOY) procedures, addresses upcoming tax changes affecting payroll processing and provides resources to help you close out your fiscal year.
Sage HRMS Year-End Center Resources
The Year-End Center for Sage HRMS provides users with essential resources through the Sage Community Hub. Navigate to the “Sage HRMS” group and find the Center’s resource library under Quick Links. The Center includes checklists, FAQs, product updates, training materials and documentation for completing end-of-year processes.
Year-End Checklist for U.S. Payroll
U.S. users should follow these six steps to close out payroll for EOY 2025:
1. Install Latest Version Update
The last Q4 2025 updates for Sage Payroll will be released sometime in December. Install this update after processing your final payroll for 2025 to ensure accurate tax tables and rates for 2026. Sage typically releases tax updates in mid-December through the self-service support portal. Note: If you do not see “Sage HRMS” or “Sage Payroll” immediately, then click on “See more products” and scroll down.
2. Update Codes
Review and update earning codes, deduction codes and tax codes with any new rates or limits for 2026. This includes:
- Mileage reimbursement rates
- 401(k) contribution maximums
- Custom tax codes
- State unemployment rates
- Workers’ compensation codes
3. Validate Data
Run key reports to verify year-to-date balances:
- Tax Calculation Analysis report
- Earnings and Hours report
- Quarterly Reconciliation Report
Review transaction history to confirm manual calculations and external payments are properly recorded. Compare report totals to quarterly 941 filings to identify discrepancies before generating W-2 forms.
4. Review and Update Employee Data
Verify employee information is current:
- Addresses for active and terminated employees
- Social Security numbers
- Tax withholding elections
- Pension plan indicators
- State tax registration
Consider using Employee Self Service (ESS) for employees to update their own information. Confirm tax codes have proper reporting IDs configured in the system.
5. Tax Forms and Filing
Use Aatrix for W-2s and 1095-C (ACA) forms processing. Aatrix integration provides options for:
- Self-service printing
- Professional printing and mailing services
- Electronic filing for federal and state compliance documents
- Combined W-2 and 1095-C mailings for cost savings
6. Prepare for 2026 Payroll
Complete final verification steps to ensure your system is ready for the first payroll period of 2026:
- Review benefit plan effective dates
- Update attendance plan accruals
- Define the 2026 fiscal year calendar
- Verify new year tax tables are installed
- Process test payroll to confirm system readiness
Benefits Plans Year-End
For changing or replacing benefit plans, use the copy plan option to transfer enrolled employees to new plans while properly expiring old ones. Integrate benefit elections with payroll deductions through automatic updates that maintain data accuracy across systems.
Set benefit plan expiration dates well into the future (e.g., 12/31/2099) to enable annual reuse. Update rates as needed and use the plan setup to expire outdated plans when necessary.
Attendance and PTO Year-End
For annual attendance plans closing at end of year:
- Ensure all current year transactions are submitted before the closing date
- Choose between two closing methods:
- The accrual year close process with specific criteria for plan closing and carryover calculations
- Process accruals through the next year’s start date
The system will prompt you to either close and accrue only to year-end or close the current plan year and accrue through your specified future date. Submit all current year transactions before closing annual attendance plans.
Key 2026 Tax Changes Affecting Payroll
Several federal tax provisions will affect payroll processing beginning in 2026. Sage will release updated tax tables to accommodate these changes, tentatively scheduled for December 2025 with potential additional updates in January 2026.
Social Security Wage Base
The Social Security wage base will increase for 2026. This affects the maximum amount of earnings subject to Social Security tax withholding.
New Employer Reporting Requirements
The One, Big, Beautiful Bill Act (OBBBA) introduces new employer reporting obligations effective for tax year 2026:
W-2 Form Updates: New codes in Box 12 for reporting specific types of income:
- Code TA: Employer contributions to specific investment accounts
- Code TP: Total amount of qualified cash tip income
- Code TT: Total amount of qualified overtime income
These codes will be used to report income types introduced under recent legislation. A new Box 14b will report occupation codes for employees who receive qualified tip income using a three-digit code format.
- Increased Reporting Thresholds: The reporting threshold for various information returns (such as Forms 1099-MISC and 1099-NEC for non-employee compensation) increases from $600 to $2,000 for payments made after 2025.
- Qualified Tip and Overtime Deductions: Employees can claim federal income tax deductions for qualified tip and overtime income from 2025 through 2028. Employers still need to withhold and remit payroll taxes on this income as usual.
Standard Deduction Adjustments
Federal standard deduction amounts will increase for tax year 2026, affecting federal income tax withholding calculations.
When to Expect Sage Tax Updates
Sage typically releases year-end tax updates in December for the upcoming tax year. For 2026 tax year changes:
- Initial Q4 2025 update: Tentative for December 6 to December 18, 2025
- Additional updates: Potential January 2026 service release for municipality tax updates
- Ongoing updates: Throughout 2026 as states release their specific requirements
Monitor the Sage Community Hub and your support portal for update availability announcements.
Year-End Best Practices
These recommended practices focus on areas where attention to detail prevents common issues:
Documentation
Take detailed notes during year-end processing. Document system-specific procedures to create a reference guide for future years. Year-end tasks occur annually, making documentation valuable for maintaining consistency.
Sage HRMS Updates
Install the Q4 release early after the final 2025 payroll period to allow time for troubleshooting. Plan for additional municipality tax updates that may arrive in the January service release.
Streamline Deductions
Use common deduction limits even with single deductions in each group to simplify updates. This provides one central location for annual maximum updates while allowing individual employee overrides when necessary.
Benefit Expirations
Set benefit plan expiration dates to accommodate annual reuse. Update rates as needed and use the plan setup to expire outdated plans when necessary, rather than deleting historical records.
Common Year-End Challenges
Tax Rates and Tables
Most rates update automatically with quarterly releases except unemployment rates and custom taxes. Watch for late municipality updates in the January service release following the initial December update.
Terminated Employee Data
Use the archive terminated employee process for records no longer needing regular access. Back up your database before archiving and maintain historical records separately for compliance purposes.
1095-C and W-2 Form Processing
Aatrix integration provides multiple options for form processing. Self-service printing is available for businesses handling distribution internally. Professional printing and mailing services are available for businesses preferring outsourced distribution.
Mass Assignments
Utilize mass update features for supervisor changes and other group updates. Back up data before processing mass changes and consider HR Actions forms for streamlined workflows requiring approval routing.
Additional Resources for Sage HRMS
Educational Resources
- SWK Content Library: Access the Sage HRMS content library for videos and technical resources
- YouTube Tutorials: View the Sage HRMS playlist for step-by-step system tutorials
- Sage University: Take advantage of training exercises and resources offered through official Sage channels
Support and Services
SWK Technologies offers targeted services for Sage HRMS users:
- System Health Checks: Request a system review to optimize your deployment and identify areas for improvement
- Year-End Support: Get assistance with data integrity checks, tax filing, government reporting and other critical year-end tasks through block-hour support packages
- Module Review: Identify opportunities to enhance your system with additional capabilities like Sage Analytics and Employee Self-Service
- Integration Services: Connect Sage HRMS with ERP systems and accounting software using built-in tools and custom integration options
Get More HR & Payroll Software Support from SWK
SWK Technologies offers a wide range of services and solutions to help you maximize your investment in Sage HRMS and other HR/payroll software. Whether you need assistance with critical year-end tasks, system optimization, training resources, or even a full software migration, the experts at SWK can provide the tailored support you need.
Contact SWK here to learn more about our HCM services, and see how our expert support and consultation services will help you get the most out of your software.