News Source: Strategic Benefits Advisors Inc.
ATLANTA, Ga., July 16, 2025 (SEND2PRESS NEWSWIRE) — Strategic Benefits Advisors, Inc. (SBA) today released a practical summary of the employee benefits provisions contained in the newly enacted One Big Beautiful Bill Act (OBBB), signed into law by President Trump on July 4, 2025. While the legislation spans a wide range of tax and policy changes, SBA’s summary highlights the bill’s most significant impacts on employer-sponsored retirement plans, health and welfare benefits and payroll operations.
Image caption: Strategic Benefits Advisors, Inc. (SBA) logo.
“Ever since the Affordable Care Act, employer-sponsored benefits have remained in flux, with each new piece of legislation adding another layer of complexity,” said SBA Director and Senior Benefits Consultant Andy Clonts. “The One Big Beautiful Bill is no different. It introduces helpful flexibilities around HSA eligibility and indexes to inflation certain limits that have been stagnant for many years. At the same time, it creates new operational and compliance challenges that plan sponsors will need to navigate.”
“Some provisions are optional, others automatic and several require careful coordination between HR, payroll and third-party vendors,” Clonts added. “Our goal is to help plan sponsors cut through the noise and quickly understand which provisions affect them so they can prioritize what to address now versus what may require longer-term planning.”
RETIREMENT PLAN IMPACTS:
- New Trump accounts for employees and dependents: OBBB creates a new tax-advantaged savings vehicle, referred to as a Trump account. Beginning in 2026, employers may contribute up to $2,500 per year (indexed for inflation) on a tax-free basis to accounts owned by employees or their dependents. These accounts function similarly to IRAs and are intended to support long-term savings goals.
HEALTH AND WELFARE PLAN IMPACTS:
- Dependent Care FSA limit increased: Beginning in 2026, the dependent care FSA contribution limit increases from $5,000 to $7,500 per household ($3,750 if married filing separately). The new cap is not indexed for inflation.
- Expanded HSA eligibility:
- First-dollar telehealth coverage: OBBB makes permanent a pandemic-era exception that allows HDHPs to offer pre-deductible telehealth benefits without jeopardizing HSA eligibility.
- Direct Primary Care (DPC): DPC arrangements are no longer considered disqualifying coverage, and associated fees (up to $150 per month for individuals or $300 per month for families) are now reimbursable from HSAs.
- Bronze and catastrophic plans: All bronze and catastrophic plans purchased on the individual Exchange now count as HDHPs for HSA eligibility purposes.
- Student loan repayment programs made permanent: OBBB makes permanent the ability for employers to provide up to $5,250 annually in tax-free educational assistance, including student loan repayments. Starting in 2026, this limit will be indexed for inflation.
- PFML tax credit expanded: The Paid Family and Medical Leave (PFML) tax credit is now permanent, is available in all states, features reduced service requirements (six months instead of one year) and applies even when employers fund leave through insurance premiums.
- Enhanced employer-provided child care credit: The maximum employer-provided child care credit increases to $500,000 (or $600,000 for qualifying small businesses), with a higher reimbursement percentage, new allowances for pooling resources and using third-party intermediaries and indexing for inflation beginning in 2026.
- Elimination of bicycle commuting reimbursement: OBBB makes permanent the repeal of a fringe benefit that allowed employers to reimburse up to $20 per month in qualified bicycle commuting expenses on a tax-free basis. Most employers did not offer it, but those that did will no longer be able to provide this reimbursement on a tax-advantaged basis starting in 2026.
PAYROLL ADMINISTRATION IMPACTS:
- Tips and overtime earnings excluded from income tax: For tax years 2025–2028, employees may deduct qualified tips and overtime premium pay from their federal taxable income when filing their annual tax return. While payroll withholding practices remain unchanged, payroll teams should ensure proper earnings breakout reporting and anticipate employee questions. Employees must continue reporting tips to their employers, and employers must treat tips and overtime as taxable income for withholding purposes and include them on employees’ W-2s.
This summary is intended to provide general information and should not be construed as legal or tax advice. For help assessing the impact of these changes on your plan and workforce, reach out to your Strategic Benefits Advisors consultant.
ABOUT STRATEGIC BENEFITS ADVISORS:
Strategic Benefits Advisors, Inc. (SBA) is an independent, full-service employee benefits consulting firm focused on creatively and effectively solving complex benefits issues for clients ranging from 500 to more than 300,000 employees. Founded in 2002 by veteran consultants Mindy Zatto and Andy Adams, SBA provides practical consulting recommendations and expert implementation of solutions for all types of employee benefits programs, including retirement, health and welfare, financial wellness and employee recognition. With an average of more than 20 years in the field, SBA’s team of actuaries, consultants and systems specialists is among the most experienced in the industry. For more information, visit https://www.sba-inc.com/.
Tags: #OBBB #employeebenefits #retirement #healthcare
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