Regulatory compliance can get tricky. Just when you think you are up to date on the latest, new legislation comes along and everything gets out of whack. Unfortunately, noncompliance can result in hefty fines, penalties, and reputational damage.

2025 is on its way, and you can be sure it will be full of regulatory changes. A well-prepared company will easily adapt to these changes ensuring seamless operations. Here are some steps that will help you get ready for what’s ahead.

What Regulatory Changes Can Organizations Expect in 2025?

Taxes and Tax Credits

• End of the Tax Cuts and Job Acts (TCJA): The TCJA is scheduled to terminate at the end of 2025. Businesses and lawmakers are up in the air regarding which provisions will replace it, but uncertainty looms in the meantime. Added complexity in the tax filing process is likely to be an issue.
• Tariffs: Changes in the presidential administration could lead to increased tariffs.
• Other Tax Policy Changes: These include exempting tipped income, overtime pay, and changes to social security benefits. Tax changes like these will impact employee income increasing the likelihood that workers will ask for raises and take less time off work. They will also impact employer filing.
• Healthcare: The Premium Tax credit may increase impacting the cost of coverage on the Health Insurance marketplace. Employees may be unable to access adequate affordable coverage under the Employer Shared Responsibility Provision in Affordable Care Act.

Retirement Savings Plans

The United States aims to provide retirement savings for citizens. On Jan. 1, 2025, SECURE 2.0 will go into effect requiring most employers to auto-enroll their employees in 401(k) and 403(b) retirement plans established after Dec. 29, 2022. Employers may also be eligible for tax breaks to offset plan startup costs.

Paid Leave

It is unlikely that the federal government will establish paid leave programs in 2025, but many states are taking the helm by establishing these programs on a local level. Check laws in your area to determine what applies to your organization.

Wage and Hour Labor Laws

• Minimum Salary Thresholds: The U.S. Department of Labor’s 2024 Overtime Rule was vacated on Nov. 15 leading to threshold changes in the minimum salaries for executives, administrative, professional, and highly compensated employees. Several states will also see minimum wage increases.
• Pay Transparency Laws: Pay transparency laws support equal pay regardless of gender, age, and race. Under these laws, employers may be forced to disclose information on compensation and benefits during the hiring process.

AI and Privacy

AI is becoming a bigger part of business, but it poses its share of risks. It is known to gather false and biased data and threaten copyrights, privacy, and cybersecurity. New regulations will target data breaches by ensuring information is encrypted, securely stored, and used ethically.

The Biden Administration’s Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence set guidelines in the past, but it was slow to catch on due to the evolving nature of the industry. In 2025, expect legislation to ramp up. Federal action will be taken if companies are caught overstepping boundaries.

How CEOs Can Prepare for Regulatory Changes

• Use Technology That Tracks Regulatory Issues: Several organizations provide compliance software that integrates with your existing systems to ensure your company is operating according to regulations. Consider adding this technology to your service suite.
• Consult with Legal Advisors: Speak with your legal team to ensure they are on the lookout for regulatory updates that could impact your business. They will alert you when updates are needed and help you remain compliant.
• Create an Agile Work Culture: An agile work culture prioritizes flexibility and adaptation to change. You can create an agile culture in your workplace by providing open lines of communication. Be transparent about possible changes and let your staff know you support them in uncertain times. Promote collaboration and autonomy so employees feel confident taking leadership roles when necessary.
• Develop an Adaption Plan: Assess possible regulatory changes and consider how you will adapt to each in terms of technological and operational updates.
• Integrate Data: Data is valuable in the decision-making process- and there will be several decisions to make when regulatory changes occur. Ensure your company has a system in place to pivot quickly.

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