The One Big Beautiful Bill Act (OBBBA) also delivers some important updates for employers, HR professionals, and tax-exempt organizations. The legislation is expanding tax-free benefits, updating savings rules, and imposing new requirements on nonprofits and higher education institutions.

Here’s what you need to know:

Expanded Educational Assistance

Employers can now permanently cover an employee’s student loan payments, up to $5,250 per year (adjusted for inflation), as a tax-free benefit.

• This benefit was originally temporary under COVID relief measures.
  
• It’s now permanent, allowing employers to help employees tackle student debt while claiming a deduction.

HSA& Direct Primary Care Flexibility

• Telehealth services: Employees can continue to receive telehealth care without jeopardizing HSA eligibility.
  
• Direct Primary Care arrangements: Employees enrolled in these low-cost, subscription-based care plans can still contribute to an HSA, provided fees remain under specified thresholds($150/month for an individual or $300/month for families, indexed).
  
• Direct primary care fees also count as qualified medical expenses payable from HSAs.

Additional Benefit Provisions to Watch

The following provisions go even further to support working families and create new ways for employers to offer tax-advantaged benefits:

Expanded Access to HSAs (Effective 2026)

The bill enhances availability of HSAs beginning in 2026 by expanding the definition of a high-deductible health plan(HDHP) to include Bronze or Catastrophic health insurance plans through the Exchange, thus allowing enrollees to use funds from their HSA to cover expenses.

The bill automatically treats as an HDHP all Bronze and Catastrophic level plans that are available on the individual market through the Exchange.

This will open access to HSAs for those enrolled in a Bronze or Catastrophic plan, even if those plan options would not otherwise meet the standard HDHP requirements.

This change is significant for Exchange policies because many Bronze-level plans currently do not qualify as an HDHP because they provide pre-deductible coverage of non-preventive services (e.g.,prescription drugs and office visits), and many Catastrophic plans do not qualify as an HDHP because their structure does not conform to the maximum permitted OOPM.

Increased Dependent Care FSA Limits (Effective 2026)

Starting with tax years after December31, 2025, the annual limit for a dependent care flexible spending account (FSA)increases:

•  From $5,000 to $7,500, and
  
• From $2,500 to $3,750 for married couples filing separately.
  

The annual limit will not be indexed for inflation in future years.

Employers wishing to increase the dependent care FSA limit for 2026 should:

• Work with their third-party administrators and legal counsel to adopt necessary plan amendments
  
• Update participant communications
  
• Conduct periodic non discrimination testing throughout 2026, which may be more difficult to pass with a higher contribution limit
• Consider whether contributions should be limited for some participants
  

Trump Account Benefits (Starting 2026)

Beginning in 2026, children under 18 will be eligible to participate in a new tax-advantaged savings program, which uses accounts known as "Trump Accounts."

These accounts will have a $5,000 annual contribution limit, which will be indexed for inflation.

• Investments in these accounts grow on a tax-deferred basis, and
  
• Distributions are generally prohibited until the child attains age 18.
  

Employers may adopt Trump Account contribution programs and contribute up to $2,500 per year (as indexed for inflation) on a tax-free basis to a Trump Account of an employee or an employee’s dependent.

However, this requires employers to:

• Adopt written plan documents, and
  
• Ensure the program meets nondiscrimination requirements similar to those applicable to dependent care FSAs.
  

Final Thoughts

These sweeping changes represent one of the most employer-friendly updates to tax-advantaged benefits in years. They not only give your employees more control over their financial futures but also offer opportunities to enhance your recruitment, retention, and compliance strategies.

If you'd like help updating your benefit plans or understanding how these changes affect your business, Reagan &Reagan CPA is here to guide you every step of the way.

Contact us today to prepare for the upcoming changes and implement forward-thinking benefit strategies.