What employers need to know about the One Big Beautiful Bill Act

On July 4, 2025, the “One Big Beautiful Bill Act” (OBBBA) was signed into law, bringing significant changes to how employers manage benefits, payroll and tax obligations. With multiple effective dates between 2025 and 2028, now is the time to start planning.

Major areas of impact

Tax treatment changes: The bill fundamentally alters how tips and overtime pay are taxed, with new rules that phase in through 2028. These changes come with specific occupation requirements, income phase-outs and new employer tax reporting obligations.

Enhanced family benefits: Dependent care assistance programs may experience meaningful increases, with generous employer-provided child care credits and paid family medical leave tax credit incentive opportunities.

Healthcare flexibility: HSA rules receive notable updates, including expanded plan compatibility and new payment options for specific healthcare services, including direct primary care options. Telehealth coverage rules also experienced permanent HSA availability.

Reinforcement of assistance programs and other emerging benefit options: The legislation made permanent that employers can reimburse or pay for qualifying education costs and other student loan debts on a tax-free basis. It also introduces entirely new benefit structures, including tax-advantaged accounts for children with both federal and optional employer contributions.

What's being scaled back: Not everything expands. Some previously favorable provisions are being eliminated or reduced, particularly around transportation fringe benefits and moving expense reimbursements.

Why act now

Your payroll systems, benefit plan documents and employee communications will all need updates. With many provisions being optional or phased in gradually, the strategic question isn’t just about compliance, but rather about how to leverage these changes to attract and retain talent while effectively managing costs.

Get the full picture

This overview only scratches the surface of what the OBBB means for your organization. Our recent webinar provides deeper insight into:

• Specific dollar limits and eligibility requirements for tipped employees and overtime tax savings opportunities
• Detailed occupation codes for tip exclusions
• Phase-out thresholds and income limits for required and optional benefit alternatives
• Specialized service business exceptions
• Step-by-step implementation guidance
• Real-world examples and employer action items

Access the full webinar recording to get the answers you need to make informed decisions about how these changes will affect your organization and employees.