Publication Date: August 26, 2025
🕒 7 minute read

 

The benefits world just got a shake-up – and for once, it’s not all bad news. The One Big Beautiful Bill Act (OBBB) has rolled in with changes that will make HR pros, benefit administrators, and maybe even payroll teams raise an eyebrow and say, “Wait… this is actually kind of nice?” 

Whether you’re knee-deep in renewal season or you just realized your summary plan description (SPD) still references 2019 IRS limits (we won’t tell), here’s your cheat sheet for what’s new, what’s next, and what you should be doing about it.

Telehealth Stays Pre-Deductible for HDHPs

During the pandemic, high-deductible health plans (HDHPs) could cover telehealth before employees met their deductible. That flexibility was on borrowed time… until now. 

HDHPs can continue offering pre-deductible telehealth without losing HSA eligibility. This makes virtual care a longer-term strategy, not just a COVID-era perk. 

👉 Employer action: Keep telehealth in your plan design and market it, employees love convenience. 

Direct Primary Care + HSA = Finally Friends

A Direct Primary Care (DPC) arrangement (not yet fully defined) is like a subscription service for your health! Think routine checkups, preventive care, chronic disease management, onsite clinics, and inpatient care visits, all without copays or insurance drama.  

The OBBB now allows employees to use their Health Savings Account (HSA) to pay for qualified DPC fees, if their monthly fees are $150 or less ($300 or less for family coverage). That means now, employers can pitch in. 

👉 Employer action: If you add DPC to your benefits menu, update your SPDs and Summary of Benefits and Coverage (SBCs), coordinate with your broker, and train your HR team on explaining what’s in and out.

Dependent Care FSA (DCFSA) Limit Increase

Starting January 1, 2026, the annual Dependent Care FSA (DCFSA) contribution limit jumps from $5,000 to $7,500. Keep in mind that passing non-discrimination testing for highly compensated employees (HCEs) may get more difficult. 

👉 Employer action: If you chose to update this amount (as it’s not required), update your summary plan description, plan for payroll system updates, and communicate the new limit during 2025 open enrollment so employees can plan ahead.

Student Loan Repayment Benefit = Permanent

The OBBB removes the sunset date for employer-provided student loan assistance (up to $5,250/year tax-free). This is no longer an “experimental” benefit; you can make it a permanent perk! 

👉 Employer action: If you offer it, get the plan documented, then promote it! It’s a retention booster for attracting and retaining employees. 

Meet the “Trump Account” – A New Way to Save for Kids

No matter how you feel about the name, the “Trump Account” is a brand-new savings tool designed just for minors. Think of it like a kid-friendly IRA/529 college savings plan, with some extra rules and perks. 

Here’s how it works: 

• Who qualifies: U.S. kids born between January 1, 2025, and December 31, 2028, as long as at least one parent has a work-eligible Social Security Number. Employees will set these up on their own. 
• Starter boost: The U.S. Treasury kicks things off with $1,000 – automatically opened if parents don’t claim it through tax filing. 
• How it grows: Funds can be invested in approved low-cost index funds or electronic funds transfer (ETFs) (no leverage, no high fees – capped at 0.1% annually). Gains are tax-free until withdrawal. 
• Contribution rules: 
  • Annual cap: $5,000 (adjusted for inflation after 2027). 
  • Employers can chip in up to $2,500 tax-free per year (adjusted for inflation after 2027). (Employer contribution is not considered gross income for the employee). Normal non-discrimination rules apply. 
  • Contributions stop once the child turns 18 and can’t start until 12 months after the law is enacted. 
• Withdrawal rules: Generally, no cash-outs until the year the child turns 18 (unless it’s a qualified rollover). 

👉 Employer action: Consider this new engagement perk; imagine contributing to employees’ kids’ futures as part of your benefits package. To offer this benefit, employers must adopt a plan document and comply with similar nondiscrimination requirements that apply to dependent care assistance programs.

Overtime Above-the-Line Tax Deductions

Starting in 2025, overtime pay just got more rewarding for non-exempt employees. Employees can now deduct up to $12,500 in overtime earnings from their taxable income each year ($25,000 if filing jointly). The allowable deduction is reduced by $100 for each $1,000 by which the employee’s gross income exceeds $150,000 (or $300,000, in the case of a joint return) for highly compensated employees. 

Here’s how it works: 

• Who qualifies: Non-exempt employees earning $150,000 or less annually ($300,000 joint return). 
• When it starts: Retroactive to January 1, 2025. 
• Expiration date: This deduction is temporary and set to end after 2028 unless extended. 

👉 Employer action: Make sure your payroll systems are tracking overtime accurately. Inaccurate reporting could mean missed deductions or compliance issues.

No Federal Income Tax on Certain Tips

For employees in tipping industries, this is big news: up to $25,000 in reported tips per person per year is now exempt from federal income tax. Non-exempt employees earning more than $150,000 ($300,000 joint return) won’t qualify. 

Here’s how it works:

• Who qualifies: Only tips reported to employers and reflected on W-2 forms. Jobs in the following industries do not qualify: health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, or brokerage services.   
• When it starts: Retroactive to January 1, 2025. 
• Expiration date: Set to expire after 2028 unless extended. 

👉 Employer action: Make sure reported tips are categorized correctly. Mishandling this could create IRS headaches later. 

Employer Childcare Credit Boost

Starting in 2026, the tax credit for employer-provided childcare jumps from 25% to 40% of qualifying expenses. Small businesses get an extra boost with a new 50% credit carve-out and higher caps ranging from $500K to $600K. Plus, the OBBB makes it easier for small businesses to pool resources or partner with third-party childcare providers while still qualifying for the credit. 

👉 Employer action: If you offer childcare benefits, work with your tax advisor to maximize credits. 

Moving & Bike Commuter Benefits Go Taxable

Moving expense reimbursements and bike commuter perks have lost their pre-tax status, with few exceptions for Armed Forces and intelligence community members. 

You might remember the $20/month tax-free bike commuter benefit that was set to return in 2026. Well, that’s officially off the table now. 

As for moving expenses, the Tax Cuts and Jobs Act (TCJA) had already required employers to include moving reimbursements as taxable wages from 2018 through 2025. The OBBB just made that rule permanent, so any employer-paid moving expenses will remain taxable for the foreseeable future. 

👉 Employer action: Update your payroll codes accordingly and be sure to communicate this tax change clearly to employees who might be expecting a pre-tax perk. 

Your 2025–2026 Benefits Roadmap 

The One Big Beautiful Bill isn’t just one thing, it’s a whole buffet of benefit updates. If you time it right, you can roll these out over the next two plan years, keeping your benefits competitive and your compliance in check.  

If you’re feeling overwhelmed or just want to be sure you’re making the most of these new opportunities, the team at Cooper People Group is here to help. We’ll walk you through the changes and help your benefits strategy stay both compliant and competitive. Contact us today to ensure your benefits plan works for both your business and your employees. 

 

Glossary of Initialisms 

ACA – Affordable Care Act
DCFSA – Dependent Care Flexible Spending Account
DPC – Direct Primary Care
ETF – Exchange-Traded Fund
FSA – Flexible Spending Account
HDHP – High Deductible Health Plan
HRA – Health Reimbursement Arrangement
HSA – Health Savings Account
IRS – Internal Revenue Service
OBBB – One Big Beautiful Bill
OE – Open Enrollment
SBC – Summary of Benefits and Coverage
SPD – Summary Plan Description
TCJA – Tax Cuts and Jobs Act 

 

Sources 

https://www.venable.com/insights/publications/2025/07/the-one-big-beautiful-bill-has-arrived-heres-what
https://www.jacksonlewis.com/insights/federal-obbba-round-what-employers-need-know-now
https://www.natlawreview.com/article/hdhp-telehealth-safe-harbor-returns-good-time
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