President Donald Trump signed the One Big Beautiful Bill Act (OBBB) into law on July 4th. Behind the fireworks is a sweeping tax and spending package that touches workplace issues from health care to executive compensation.

Here’s what’s in, what’s out, and what it means for your workplace:

Health plan flexibility

Employers gain the following new options for health plans:

Permanent telehealth relief: Employers sponsoring high-deductible health plans (HDHPs) paired with Health Savings Accounts (HSAs) can now permanently cover telehealth services before employees meet their deductible without jeopardizing HSA eligibility. The change is effective retroactively for plan years starting on or after January 1, 2025.
Direct primary care (DPC): Starting in 2026, employees can use HSA dollars to pay for DPC arrangements (up to $150/month for individuals or $300/month for families, indexed for inflation). Historically, these arrangements were disqualified for HSA participation; the new law fixes that.

Given these changes, employers should decide whether to retroactively apply telehealth relief for 2025 and communicate the upcoming DPC/HSA changes to employees, especially during 2026 open enrollment.

Dependent care FSAs: Long-awaited increase

The dependent care flexible spending account (FSA) limit jumps from $5,000 to $7,500 starting in 2026 (for married couples filing separately, the limit is $3,750). While that isn’t indexed to inflation, it’s the first permanent increase in decades.

Employers will need to:

Update plan documents and open enrollment materials.
Coordinate with third-party administrators.
Make sure your plan can still pass the 55% Average Benefits Test.

Student loan repayment & new ‘Trump Accounts’

The measure includes the following changes related to student loan contributions and a new savings vehicle for children:

Student loan repayment: Employers can permanently contribute up to $5,250/year toward employees’ student loan repayments tax-free under educational assistance programs. Starting in 2026, this limit will be indexed for inflation.
Trump Accounts: Under this new tax-favored savings vehicle for children under 18, employers can contribute up to $2,500/year per employee child, tax-free (indexed). The accounts grow tax-free, and a federal pilot program will seed $1,000 for children born between 2025–2028.

Consider these as potential new perks to support recruitment and retention, especially for younger employees or those with children.

Executive compensation tightened

Starting in 2026, the deduction limit under Section 162(m) (for pay over $1 million to certain executives) now applies to executives paid by multiple entities in a controlled group.

The excise tax on compensation over $1 million at tax-exempt organizations now applies more broadly: not just to the top five highest-paid employees, but to all current and former employees exceeding that threshold.

As a result, employers should review executive pay structures, especially if your organization is part of a corporate group or is tax-exempt.

New fringe benefit rules & immigration enforcement

No more tax-free bike commuter benefit: OBBB permanently repeals the tax-free bicycle commuting benefit, effective 2026. Employers can still offer bike perks, but they’ll be taxable.
Increased ICE funding: A tripling of the Immigration and Customs Enforcement budget signals more audits, workplace inspections, and potential raids, especially in industries like hospitality, agriculture and construction.

Employers are generally advised to refresh immigration compliance programs and train managers on how to respond if ICE shows up.

Medicaid work requirements & broader impact

OBBB adds work requirements (80 hours/month) for Medicaid recipients aged 19–64. This could encourage more individuals to seek employment, increase HR involvement in verifying work hours for employees on Medicaid, and/or lead to higher enrollment in employer plans if employees lose Medicaid coverage.

Next steps

Most of OBBB’s changes take effect in 2026, giving employers time to plan. But a few require attention now, especially telehealth relief retroactive to 2025.

Here’s an action checklist for employers: