Future Legal Developments: Key Proposed Laws and Regulatory Changes for 2025-2026
What’s Really Changing in Law and Regulation Right Now?
If you’re running a business, managing employees, or just trying to stay on top of your taxes, you can’t afford to ignore what’s happening in the legal world right now. The period from 2025 to 2026 is one of the most active in recent memory when it comes to new laws and regulatory shifts. It’s not just one big change - it’s dozens, happening at once, across different levels of government. And they’re not all coming from Washington. In fact, most of the real impact is coming from state legislatures, especially in places like California.
California’s Labor Laws Are Getting a Major Overhaul
If you employ people in California, your HR team needs to be working overtime. Two major bills - AB 406 and SB 642 - changed how employers handle leave, pay transparency, and workplace accommodations. AB 406, which took effect October 1, 2025, merged three separate leave laws into one. Now, employees who are victims of domestic violence, sexual assault, or stalking can take time off under the Fair Employment and Housing Act (FEHA), and employers must update their notice policies. The Civil Rights Department is already preparing a new model notice for companies to post.
SB 642 tightens pay disclosure rules. Employers must now include pay ranges in all job postings - not just internal ones - and must provide pay scale information to current employees upon request. Failure to comply can mean fines up to $10,000 per violation. Companies are spending between $1,200 and $1,800 per employee on training to get everyone up to speed.
And there’s more coming. SB 590 expands Paid Family Leave to cover people caring for a ‘designated person’ - someone who isn’t a relative but has a family-like bond. That won’t kick in until July 1, 2028, but legal teams are already drafting policies. This isn’t a minor tweak. It’s a redefinition of what counts as family in the workplace.
The Federal Tax Game Has Changed
On July 4, 2025, Congress passed what’s being called the ‘One, Big, Beautiful Bill’ - Public Law 119-21. It’s a massive tax package with lasting effects. The most noticeable change for individuals? A new $6,000 deduction for anyone aged 65 or older, available for tax years 2025 through 2028. That’s not a credit. It’s a direct reduction in taxable income. For retirees living on fixed incomes, this could mean hundreds or even thousands in extra take-home pay.
But the biggest surprise? The IRS reversed its own rule on Form 1099-K. After years of pushing to lower the reporting threshold to $600, they rolled it back to $20,000. That means if you’re a freelancer or small business owner who uses PayPal, Venmo, or Cash App, you won’t get a 1099-K unless you made over $20,000 in transactions in a year. The IRS issued FS-2025-08 to clarify this, and tax professionals are scrambling to update their software and client guidance.
Meanwhile, the Employee Retention Credit (ERC) rules were rewritten under the same bill. Many businesses that claimed ERC during the pandemic are now being asked to repay - but only if they don’t meet the new, stricter eligibility criteria. The IRS released FS-2025-07 to help taxpayers understand what’s changed.
Firearms Rights Are Expanding - But Only for Certain People
H.R.2243, the LEOSA Reform Act of 2025, passed the House in May and is now in the Senate. If it becomes law, it will significantly expand where qualified active and retired law enforcement officers can carry concealed firearms. They’ll be allowed in school zones, national parks, and even on private property that’s open to the public - places that were previously off-limits under the federal Gun-Free School Zones Act.
The bill also lets states reduce how often retired officers must requalify with their firearms. Right now, many states require annual training. This law would let them cut that to every three or five years. It’s a win for law enforcement unions, but it’s also a flashpoint for public safety advocates. Legal experts say this could trigger lawsuits in states with strict gun laws, especially if local ordinances conflict with the new federal rule.
Housing Construction Is About to Get a Lot Faster - in California
California’s housing crisis has led to the most aggressive legislative response in decades. AB 130 and SB 131, passed as part of the 2025-2026 state budget, create sweeping exemptions to the California Environmental Quality Act (CEQA). For years, CEQA has been used to delay or block housing projects through lawsuits and environmental reviews that can take years.
Now, qualifying housing developments - especially those near transit hubs or in high-demand areas - can skip many of those steps. The California Building Industry Association estimates this will cut project approval times by 18 to 24 months. The state’s Department of Finance predicts housing production could rise by 15% to 20% annually as a result.
But this isn’t a free pass. Developers still need to meet affordability requirements, and local governments must certify that projects align with regional housing needs. Still, for the first time in a decade, builders are seeing a real path to faster approvals.
The Supreme Court Is Poised to Reshape American Law
The 2025-2026 term marks the 20th anniversary of the Roberts Court. And this term could be its most consequential yet. Legal analysts from American Progress and Bloomberg Law warn that major rulings are coming on presidential power, federal agency authority, and individual rights. The Court is expected to rule on cases that could weaken the ability of agencies like the EPA or SEC to enforce rules without explicit congressional approval.
One pending case could redefine what counts as ‘arbitrary and capricious’ in administrative law - a standard that’s been used to strike down federal regulations for decades. If the Court tightens that standard, it could make it harder for agencies to issue new rules, even in areas like healthcare, climate, or finance.
Legal departments at Fortune 500 companies have already responded. According to Bloomberg Law, they’ve increased hiring of constitutional law specialists by 25% since early 2025. This isn’t about courtrooms. It’s about risk management. Companies need to anticipate how rulings might affect contracts, compliance, and operations.
Compliance Is No Longer a Once-a-Year Task
Here’s the hard truth: if you think you can handle legal changes with an annual review, you’re already behind. The California Chamber of Commerce calls it a ‘constant, enterprise-wide effort.’ And they’re right.
RegEd’s data shows over 4,800 new regulations were published in 2024 alone - 1,200 in securities, 680 in federal insurance, and 2,700 at the state level. And that’s just what was finalized. Hundreds more are still in draft form. The federal government is rolling back some rules - especially in Medicare Advantage and anti-money laundering - but states are filling the gaps with stricter ones.
Organizations are responding. Compliance teams are growing by 15% to 20%. Many are investing in RegTech tools - software that uses AI to track changes across 50 states and federal agencies. Deloitte found that 78% of Fortune 500 companies plan to have AI-powered regulatory monitoring systems in place by 2026.
The cost of falling behind? PwC estimates 15% to 25% higher compliance costs and a higher chance of fines or enforcement actions. It’s not just about legal risk. It’s about operational risk. A single missed deadline on a leave policy or tax form can cost more than the salary of a compliance officer.
What You Need to Do Now
Don’t wait for a lawyer to tell you something changed. Start acting now:
- Review your HR policies - especially if you’re in California. Update your leave notices, pay disclosure templates, and employee handbooks.
- Talk to your accountant - the $6,000 deduction and 1099-K threshold change affect how you file taxes for 2025. Don’t assume your old software knows the rules.
- Track pending legislation - use state legislative tracking tools. If you’re in New York, Texas, or Florida, you’re not immune. Thirty-seven states passed at least one major employment law change in 2025.
- Invest in automation - if you’re managing compliance manually, you’re wasting time and risking errors. RegTech tools aren’t luxury items anymore. They’re essential.
- Prepare for court decisions - if your business relies on federal regulations (like healthcare, finance, or environmental compliance), start mapping out what happens if key agencies lose power.
Legal change isn’t slowing down. It’s accelerating. And the companies that survive - and thrive - in 2026 won’t be the ones with the biggest legal teams. They’ll be the ones that move fastest, adapt earliest, and treat compliance like a core business function - not a checkbox.
Are federal laws overriding state laws in 2025-2026?
No. In fact, the opposite is happening. While the federal government is rolling back regulations in areas like Medicare and financial oversight, states like California, New York, and Washington are expanding their own rules - especially in labor, housing, and data privacy. This creates a patchwork where businesses must comply with both sets of rules. Federal law only overrides state law when there’s a direct conflict, and courts are increasingly siding with states on issues like employment rights and environmental standards.
Do I need to worry about these changes if I’m not in California?
Yes. California often leads the way on labor and environmental laws, and other states tend to follow. For example, pay transparency rules started in California and are now in New York, Colorado, and Washington. The federal tax changes - like the $6,000 deduction and 1099-K threshold - affect everyone. And if your business operates across state lines, you’re already dealing with multiple sets of rules. Ignoring California’s changes means you’re ignoring a trend that will likely spread.
What’s the biggest risk for small businesses?
Missing deadlines. Small businesses don’t have dedicated compliance teams. A single missed notice - like the updated victims’ leave policy or a tax form change - can trigger a fine or lawsuit. The cost of fixing it is often higher than the fine itself. The best defense is setting up a quarterly compliance review with your accountant or HR provider, even if you’re just a one-person operation.
Will the new tax deduction for seniors affect my Social Security benefits?
No. The $6,000 deduction is for taxable income, not Social Security. It reduces the amount of your pension, IRA withdrawals, or other income that’s taxed. It doesn’t change how much you receive from Social Security or whether your benefits are taxed based on your total income. The IRS confirms this in FS-2025-07. You still need to calculate your combined income to see if your Social Security is taxable - but this deduction lowers the total, which could help.
How do I know if a new law applies to me?
Start by identifying your industry and location. If you’re in healthcare, watch federal Medicare changes and your state’s Medicaid rules. If you have employees, track employment laws in every state where you have workers. Use free tools like the National Conference of State Legislatures (NCSL) website or your state’s legislative tracker. Subscribe to updates from your industry association - they often summarize changes in plain language.
Amanda Eichstaedt
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