On July 4th, while many of us were grilling hot dogs and dodging fireworks, President Trump signed the One Big Beautiful Bill Act (HR 1) into law. Love the name or roll your eyes at it, this bill packs a massive punch for employers, especially when it comes to tax incentives tied to benefits.
From paid leave and student loan repayment to childcare credits and a whole new breed of savings accounts (hello, Trump Accounts), this legislation makes some temporary perks from the old TCJA world permanent—and adds a few new wrinkles for plan sponsors to chew on. If you offer benefits, you’re going to want to pay attention. Here’s the short version of what matters:
1. Paid Family Leave Gets Permanently Valuable
That tax credit for offering paid family and medical leave? It’s permanent now. Employers can claim a credit for a percentage of wages or insurance premiums related to leave—as long as that leave isn’t required by state or local law. If you’ve been hesitant to offer paid leave, this gives you more long-term incentive to do so.
2. Childcare Credits Expand in a Big Way
The tax credit for employer-provided childcare expenses is now juiced up to 40% (50% for small businesses), with limits that go up to $500k and $600k respectively. If you help fund or operate childcare for your employees, Uncle Sam is officially giving you a high five.
3. Telehealth + HSAs = Permanently Compatible
Telehealth services can be covered before the deductible for HDHPs, permanently. And starting in 2026, direct primary care arrangements will also be HSA-compatible. This opens up more flexibility in how you structure high-deductible health plans and wellness programs.
4. Student Loan Repayment Gets a Lifeline
That $5,250/year tax exclusion for employer-paid student loan help? It’s here to stay. So is the Section 127 education assistance limit—with inflation adjustments added. Expect this benefit to become a bigger deal for recruiting and retention.
5. Introducing… Trump Accounts
Yes, that’s the actual name. Think of them as IRAs for kids under 18, with contribution limits, employer match possibilities, and a weird (but probably well-funded) pilot program giving new parents a $1,000 credit to kickstart savings. You’ll likely hear more as providers figure out how to integrate this into benefit packages. Stay tuned—and definitely consult your tax pro before jumping in.
6. 529 Plans Can Now Cover More
Expanded uses for 529 distributions now include K-12 schooling, tutoring, therapies for students with disabilities, and credentialing expenses. A big win for parents—and a reason to remind employees to revisit their 529 strategies.
7. Bicycle Commuting Is Back (and So Is Moving Help)
Qualified bicycle commuting reimbursements are back in play—on a taxable basis. Moving expense reimbursements get special tax treatment for military and intelligence personnel.
8. ACA and Medicaid Changes: Not Immediate, But Big
There’s a long tail to the ACA/Medicaid cuts, many not felt until after the 2026 midterms. Still, fewer people on Medicaid or ACA plans could mean more folks looking to employer plans for coverage. This could affect risk pools, plan costs, and participant behavior down the line.
9. Temporary Tax Deductions for Employees
Employees can now deduct up to $25,000 for tips and $12,500 for overtime. This is temporary, but it could factor into how you communicate compensation packages, especially in service industries.
What Should Plan Sponsors Do Now?
· Talk to your providers. These changes may affect plan design, communications, and compliance in big ways.
· Review your benefits strategy for 2026. This is a great opportunity to modernize offerings and attract/retain talent.
· Stay informed. Agencies are going to be issuing regulations for the next year to sort out the details, especially around Trump Accounts and telehealth arrangements.
Bottom line: The One Big Beautiful Bill lives up to its name in scope, even if it leaves a few open questions. It gives plan sponsors more tools to build meaningful, tax-savvy benefit packages—if they’re willing to do the homework.
Stay tuned, because the devil is always in the guidance.