Future Legal Developments: Proposed Laws and Regulatory Changes in 2025-2026

By 2025, the legal landscape in the United States had shifted in ways most organizations didn’t see coming. It wasn’t just one big law passed in Washington. It was hundreds - in statehouses, courtrooms, and federal agencies - all at once. And they weren’t just changing rules. They were rewriting how businesses operate, how people work, and even how justice is applied.

If you’re running a company, managing payroll, or just trying to stay on the right side of the law, you can’t afford to treat legal changes as occasional updates anymore. They’re constant. They’re complex. And they’re happening right now.

California’s Labor Laws Got a Major Overhaul

California didn’t wait for federal action. In 2025, it passed three major employment laws that hit employers hard. Assembly Bill 406, which took effect October 1, 2025, merged two 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). Employers had to update their handbooks, training materials, and notice posters within 30 days.

On top of that, the state changed its paid sick leave rules. Previously, workers earned sick time based on hours worked. Now, the law requires employers to offer at least 40 hours per year - and they can no longer cap usage at 24 hours. This alone forced HR departments to rework their time-off tracking systems. Companies with 50+ employees reported spending between $1,200 and $1,800 per worker on training and software updates to comply.

Senate Bill 642 also changed pay transparency. Employers must now disclose pay ranges not just in job postings, but also during interviews and upon request. Violations can lead to fines up to $10,000 per employee. And don’t forget Senate Bill 590 - though it doesn’t kick in until 2028, it’s already being planned for. It expands paid family leave to cover anyone the worker considers family - even if they’re not related by blood. A coworker who’s like a sibling? A partner who’s been together 15 years? They qualify.

The Federal Tax Game Changed - Again

On July 4, 2025, Congress passed what’s being called the “One, Big, Beautiful Bill.” It didn’t just tweak taxes. It flipped them upside down. The biggest change? A $6,000 deduction for anyone 65 or older, effective for tax years 2025 through 2028. That’s not a credit. It’s a full deduction off your taxable income. For retirees on fixed incomes, this means thousands in savings.

But there’s a catch. The IRS also rolled back the Form 1099-K reporting threshold. In 2024, you had to report income if you made over $600 on platforms like PayPal or Etsy. In 2025, that number jumped back to $20,000. Why? Because Congress decided the old rule was too burdensome for small sellers. Now, freelancers and gig workers under $20,000 in gross receipts won’t get a 1099-K at all. That’s good news for side hustlers - but bad news for tax collectors.

The IRS issued two key guidance documents in October 2025: FS-2025-07 on Employee Retention Credits and FS-2025-08 on 1099-K FAQs. Tax professionals saw a 40% spike in enrollment for 2025 update courses. Bookkeepers who didn’t retrain are now losing clients.

Firearms Rules Got a Federal Upgrade

H.R.2243, the LEOSA Reform Act of 2025, passed the House on May 15, 2025, and landed in the Senate the same day. It’s quietly one of the most significant changes to gun laws in decades. The law allows qualified active and retired law enforcement officers to carry concealed firearms in places they couldn’t before: school zones, national parks, state-owned buildings open to the public, and even some federal facilities.

States can now reduce how often retired officers must re-qualify with their firearms. Previously, some required annual training. Now, states can extend that to every three years. That’s a big win for rural departments with limited resources.

But here’s the twist: this law doesn’t override state bans. If a state like California or New York says no concealed carry in public buildings, they can still enforce it. The federal law just gives officers more flexibility - not blanket permission. So compliance depends on where you are.

Housing Laws Broke the Mold

California’s housing crisis got a radical solution. Assembly Bill 130 and Senate Bill 131, signed into law in June 2025, stripped away decades of environmental review rules under CEQA (California Environmental Quality Act). For qualifying housing projects - especially those near transit hubs or in high-density zones - developers no longer need to file lengthy environmental impact reports.

The California Building Industry Association estimates project approval times will drop by 18 to 24 months. That’s huge. In 2024, the average approval took 4 years. Now, it’s closer to 2. The state expects housing production to jump 15-20% annually.

But it’s not all good news. Critics say removing CEQA review could lead to unchecked development in flood zones or near endangered species habitats. Legal challenges are already brewing. Environmental groups are preparing lawsuits. Developers, meanwhile, are rushing to file permits before the next legislative session.

Federal Deregulation Isn’t What It Seems

You might think less regulation means easier compliance. Think again.

The federal government began rolling back oversight in Medicare Advantage, ACA subsidies, and anti-money laundering rules. On paper, that sounds like relief. But here’s what actually happens: companies that used to rely on federal rules as their baseline now have to track what’s been removed - and what’s still left.

For example, if the federal government stops requiring certain disclosures for Medicare Advantage plans, but California still does, your compliance team now has to maintain two sets of rules. That’s more work, not less.

RegEd’s 2025 data shows state insurance compliance requirements jumped 22% in the first half of the year. That’s because states are filling the gaps left by federal deregulation. It’s not chaos - it’s strategy. States are becoming regulatory powerhouses.

The Supreme Court Is Rewriting the Rules

The Roberts Court turned 20 in 2025. And its rulings are getting bolder. In 2025, the Court signaled it’s ready to expand presidential power and limit constitutional rights in ways not seen since the 1980s. One pending case could allow the president to bypass Congress on spending decisions. Another might strip states of their power to regulate private conduct.

Legal departments at Fortune 500 companies have increased their constitutional law teams by 25% since January 2025. Why? Because every major corporate decision now has to be reviewed through the lens of what the Court might rule next.

Companies aren’t waiting for rulings. They’re preparing for them. If the Court rules that states can’t ban certain business practices, corporations are quietly shifting operations to states where those practices are still legal.

Compliance Isn’t a Department - It’s a System

Organizations that treat compliance like a checklist are failing. The California Chamber of Commerce says it best: regulatory change management is no longer episodic. It’s constant.

Here’s what works now:

• Assign a cross-functional team - legal, HR, finance, IT - not just one person.
• Use RegTech software that auto-updates based on jurisdiction. Gartner projects 35% growth in this sector for 2025.
• Train staff quarterly, not annually. New laws come too fast for yearly refreshers.
• Track not just what’s passed, but what’s pending. Over 1,200 new regulations are expected in the second half of 2025.

Deloitte found that 78% of Fortune 500 companies plan to use AI-powered regulatory monitoring by 2026. These tools scan bills, court decisions, and agency notices in real time. They don’t replace lawyers - they free them up to focus on strategy, not paperwork.

What’s Coming in 2026?

The next wave is already on the horizon:

• The IRS will release 2026 tax inflation adjustments, including updates to the $6,000 senior deduction.
• More states will pass wage theft and independent contractor laws, following California’s lead.
• At least 10 states are considering laws to require employers to offer mental health leave.
• The Supreme Court is expected to rule on at least three major constitutional cases - all with business implications.
• Legislation to restore free phone calls for detainees is moving through Congress. That could affect how prisons contract with telecom providers.

One thing is clear: the days of stable legal environments are over. The rules are shifting faster than ever. And if you’re not building systems to adapt, you’re already behind.