One Big Beautiful Bill Act of 2025: Comprehensive Guide to Key Provisions

Strategic Insights -

The One Big Beautiful Bill Act of 2025 (OBBBA) was enacted on July 4, 2025, significantly impacting various aspects of employee benefits, tax credits, and executive compensation. The legislation includes major changes to high-deductible health plans (HDHPs) and health savings accounts (HSAs), fringe benefits, Affordable Care Act premium tax credits, executive compensation, and 529 College Savings and Achieving a Better Life Experience (ABLE) accounts. The OBBBA introduces a range of new provisions and extends existing ones, providing clarity on key aspects of employee benefits and tax laws.

Key Takeaways:

  • The OBBBA introduces a safe harbor for HDHPs providing first-dollar telehealth and other remote care services before participants have satisfied the statutory deductible, effective for plan years beginning after December 31, 2024.
  • Direct primary care service arrangements will not disqualify an otherwise eligible individual from contributing to an HSA, effective for months beginning after December 31, 2025, provided the arrangement includes primary care services for a fixed fee of $150 per month (individual) or $300 (more than one person).
  • The OBBBA modifies the eligibility for individuals to receive premium tax credits based on their immigration status, effective for plan years beginning on or after January 1, 2027.
  • Employers will be able to make lawfully present aliens with household incomes of less than 100% of the federal poverty level ineligible for premium tax credits, effective for taxable years beginning after December 31, 2025.
  • The OBBBA prohibits passive enrollment in individual health insurance plans through an Exchange, effective for taxable years beginning after December 31, 2027, and requires Exchange verification of eligibility for health plan.
  • Employers making student loan reimbursement payments will not be challenged, effective for payments made after December 31, 2025. The OBBBA also indexes the overall educational assistance program exclusion (currently $5,250) for inflation.
  • The OBBBA expands the definition of a "qualifying employee" for PFML to include those employed for at least six months, effective for taxable years beginning after December 31, 2025.
  • The OBBBA increases the employer-provided child care tax credit to up to $500,000, effective for amounts paid or incurred after December 31, 2025.
  • The OBBBA extends the current contribution limit for ABLE accounts, effective for contributions after December 31, 2025, and extends an additional year of inflation adjustment for the base amount of the contribution limit.
  • The OBBBA makes permanent the Saver's Credit available to designated beneficiaries who make qualified contributions to their ABLE accounts, effective for taxable years after December 31, 2026, and increases the credit amount from $2,000 to $2,100.
  • The OBBBA creates new tax-preferred accounts for children, referred to as "Trump Accounts," effective for taxable years beginning after December 31, 2025, with contributions of up to $5,000 per year.

Statistics:

  • Up to $150 per month (individual) or $300 (more than one person) will be the fixed fee for primary care services under direct primary care service arrangements.
  • Tax credits for child care will be increased to up to $500,000, and 50% of qualified expenses will be eligible for the employer-provided child care tax credit.
  • The ABLE contribution limit will be extended for an additional year with inflation adjustment for the base amount.
  • "Trump Accounts" will allow for contributions of up to $5,000 per year, and employers may contribute up to $2,500 annually to "Trump Accounts" of an employee or any dependent of an employee.

Sources:

  • One Big Beautiful Bill Act of 2025 (July 4, 2025)
  • Tax Cuts and Jobs Act
  • Immigration and Nationality Act
  • Refugee Education Assistance Act of 1980
  • Internal Revenue Code Section 162(m)
  • Internal Revenue Code Section 4960
  • Article provided by Kutak Rock LLP