The One Big Beautiful Bill Act: What Employers Need to Know
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, introduces a range of changes that impact employers particularly around payroll, benefits, and tax reporting.
We’ve reviewed the legislation and highlighted what you need to know as an employer. Here’s what’s in effect now, what’s on the horizon, and how to start preparing.
What’s In Place for 2025
Student Loan Repayment Benefit Made Permanent
If you offer student loan repayment assistance to employees, this benefit is now permanent. Employers can provide up to $5,250 per year in repayment assistance without triggering federal income or payroll taxes.
Why this matters: If you're already offering this benefit, nothing needs to change. If not, this may be a good time to revisit your recruitment and retention strategy.
Dependent Care FSA Limit Increased
The annual cap for Dependent Care Flexible Spending Accounts has increased from $5,000 to $7,500. This is the first statutory increase since the 1980s.
Planning tip: Review and update your plan documents and employee communication materials before your next open enrollment period.
Direct Primary Care (DPC) Arrangements Now HSA Eligible
Employees enrolled in high-deductible health plans can use HSA funds to pay for qualifying DPC memberships, up to $150 per month for individuals or $300 per month for families.
What to consider: Check whether any of your current health plan options are compatible with DPC arrangements. You may want to provide basic education to employees about how this works.
What’s Coming In 2026
HSA Eligibility Expands to Bronze and Catastrophic Plans
Beginning in 2026, employees enrolled in Bronze or Catastrophic plans through the ACA exchange will be able to contribute to a Health Savings Account (HSA).
What this means: You may not need to take immediate action, but it’s helpful to keep this in mind when evaluating health plan options or updating benefit materials in the future.
Inflation Adjustments and Effective Dates
All dollar limits noted above (including the $5,250 student loan benefit, $7,500 Dependent Care FSA cap, and the monthly DPC thresholds) will be indexed for inflation starting in 2026.
For the HSA changes, note that:
DPC eligibility is effective for tax years beginning after December 31, 2024 (i.e., starting in 2025), and
Bronze/Catastrophic plan eligibility begins for tax years after December 31, 2025 (i.e., in 2026).
A Note About Paid Family and Medical Leave
While OBBBA did not create a new federal requirement for employers to offer paid family and medical leave, it did make the existing federal tax credit permanent and expand its scope. Employers who voluntarily provide at least two weeks of paid family and medical leave, either through direct payments or an insurance policy, may continue to claim a tax credit. The amount of the credit depends on the level of wage replacement offered.
To qualify, employers must have a written policy that meets federal requirements. The leave must also be used for purposes covered by the Family and Medical Leave Act. This change gives employers an ongoing incentive to offer paid leave, especially for those looking to strengthen their benefits without adding significant cost.
Start Planning Without Overcommitting
Many of these provisions are straightforward, but some could benefit from a closer look depending on your employee base and business goals. Questions to consider:
Are you making use of all available tax-advantaged benefits?
Are your systems and vendors ready to handle new thresholds and categories?
Could you benefit from updating benefit materials or policies now?
Let’s Talk About What This Means for You
Tax law is rarely one-size-fits-all. What makes sense for one business might not be the best move for another.
We’re here to help you sort through the details and figure out what applies to your business. If you'd like support navigating the new rules or building out your strategy, reach out to us.
