---
title: Maximizing Tax Breaks and Benefits from the Recently Passed One Big Beautiful Bill (OBBB)
description: The One Big Beautiful Bill Act was signed into law on July 4, 2025. This budget reconciliation bill includes several provisions that affect employers.
---

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# [Maximizing Tax Breaks and Benefits from the Recently Passed One Big Beautiful Bill (OBBB)](https://koppingerins.com/blog/maximizing-tax-breaks-and-benefits-from-the-recently-passed-one-big-beautiful-bill-obbb)

 Written by [Koppinger & Associates](https://koppingerins.com/blog/author/koppinger_associates) | Jul 17, 2025 7:00:00 PM

The **One Big Beautiful Bill Act (OBBBA)** was signed into law on July 4, 2025. This budget reconciliation bill includes several provisions that affect employers. Here’s a look at the most impactful changes.

| **Changes to Employee Benefit Plans** |
| --- |

- For plan years beginning after December 31, 2024, the bill **permanently allows HDHPs to offer telehealth benefits** before the deductible is met without jeopardizing HSA eligibility  
- Starting in 2026, individuals may participate in **direct primary care (DPC)** arrangements with monthly fees up to $150 for individuals or $300 for families (indexed annually) without losing HSA eligibility, and these DPC fees can be paid tax-free from an HSA
- Effective January 1, 2026, the maximum annual limit for **dependent care flexible spending accounts (FSAs)** increases to $7,500 for single individuals and married couples filing jointly 
- Starting in 2026, employer **student loan payments or reimbursements up to $5,250 per year** (adjusted annually) remain eligible for tax-free treatment under Section 127 educational assistance programs 
- Beginning in 2026, allows employers to contribute up to $2,500 per year (indexed after 2027) to a new type of **tax-advantaged account for children**, called a "Trump Account" 

| **Permanent Expansion of Paid Family and Medical Leave (PFML) Tax Credit** |
| --- |

- The PMFL tax credit is now permanent, as the law eliminates the expiration date that would have ended the credit after 2025 

| **Elimination of Taxes on Overtime Compensation and Qualified Tips** |
| --- |

- Effective for tax years 2025-2028, workers earning up to $150,000 ($300,000 joint) can deduct up to $12,500 in **qualified overtime pay** ($25,000 joint) and up to $25,000 in qualified cash tips (from customary tip-earning occupations) from their taxable income each year
- Employers must separately report overtime and qualifying tips on employee W-2 forms

| **Employer Next Steps** |
| --- |

- Review and update plan documents for alignment with changes
- Consult with legal counsel to amend written plan documents as needed to reflect updated limits, eligibility, and administrative requirements
- Communicate these changes to employees
- Monitor IRS and regulatory guidance
- Adjust payroll systems to accurately track and report overtime compensation and qualifying tips on employees' W-2 forms

 

***Koppinger & Associates is not a law firm and does not provide legal advice.  This communication is not legal*** ***advice. For legal matters, please consult your attorney.*** 

 

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