The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, includes several important changes to employee benefits, payroll, and compliance—especially relevant for small businesses. If you’re preparing for 2026 open enrollment or thinking about how to stay competitive in today’s hiring market, these updates matter.
Here’s what small business owners and HR leaders need to know:
Big Improvements to HSAs and FSAs
The OBBBA made several key updates to Health Savings Accounts (HSAs) and Dependent Care FSAs, starting in 2026.
HSA Changes:
- Marketplace Plan Eligibility: For the first time, employees enrolled in Bronze or Catastrophic Marketplace plans will be allowed to contribute to HSAs.
- Direct Primary Care (DPC): Employees can now use HSA dollars to pay for fixed-fee DPC services—up to $150/month for individuals and $300/month for families.
- Telehealth Coverage: Employers can permanently offer pre-deductible telehealth in HSA-compatible plans. This change is retroactive to the beginning of 2025, so it applies to current plan years.
Dependent Care FSA Changes:
- The annual limit increases from $5,000 to $7,500, starting January 1, 2026.
- This helps working parents save more pre-tax money for childcare, preschool, summer camp, and more.
- Note: This limit is not adjusted for inflation, and plans can’t change mid-year.
What HR should do:
- Communicate the changes clearly during open enrollment so employees can make informed decisions.
Trump Accounts: A New Way to Support Working Parents
Starting in 2026, employers can contribute to Trump Accounts, a new kind of savings account created to help children build long-term wealth.
Key features:
- Children born between 2025–2028 receive $1,000 from the government.
- Employers can contribute up to $2,500 per child per year, tax-free.
- Must be offered fairly (nondiscriminatory) and part of a formal written plan.
Why this matters:
- A standout benefit for employees with young children.
- Could become a competitive advantage for attracting and retaining talent.
Student Loan Repayment Benefit Is Now Permanent
Employers can now permanently offer up to $5,250 per year in tax-free student loan repayment as part of their education assistance program.
Why it matters:
- It’s a powerful recruiting tool for early-career professionals.
- The amount will adjust for inflation starting in 2026.
What to do:
- Add student loan assistance to your benefits strategy if you’re hiring Gen Z or Millennial workers.
- Ensure it’s documented under a Section 127 education plan.
Tax-Free Overtime and Tip Income
Employees can now exclude from federal income tax:
- Up to $25,000 in tip income, and
- Up to $12,500 in overtime pay each year (through 2028).
Why this matters:
- A meaningful financial perk for hourly and service industry workers.
- Could improve morale and retention in high-turnover roles.
Payroll note: Make sure your system can handle this and that W-2 reporting is updated accordingly.
Childcare Tax Credit for Employers
If your company helps pay for employee childcare (on-site, third-party, or contracted), you may now qualify for:
- A 50% tax credit (up from 40%)
- Up to $600,000 per year (up from $500,000)
Small business bonus: Businesses with under $31 million in gross receipts get access to the enhanced credit.
Paid Family and Medical Leave Credit Is Now Permanent
The federal tax credit for employers who offer paid family and medical leave is no longer temporary. It’s here to stay.
Changes include:
- Employees qualify after just 6 months of employment (down from 1 year).
- Applies even when premiums are paid through insurance policies.
What to do:
- Make sure your policy is up to date and clearly documented.
- Talk to your CPA about claiming the credit if you’re already offering paid leave.
Summary: HR Takeaways for 2026 and Beyond
| Area | What Changed | What It Means |
| HSAs | Now allowed with Marketplace plans, DPC eligible, telehealth pre-deductible | More flexibility, better access |
| Dependent Care FSA | Limit increases to $7,500 | More support for working parents |
| Trump Accounts | Employer contributions allowed up to $2,500/child/year | Unique benefit for families |
| Student Loan Repayment | Now permanent and inflation-adjusted | Great recruiting tool |
| Overtime & Tip Income | Partially tax-free through 2028 | Boosts take-home pay for hourly workers |
| Childcare Credit | Larger credit, better terms for small businesses | Offsets childcare support costs |
| Paid Leave Credit | Expanded eligibility, permanent | Rewards employers offering leave |
Final Thoughts
The OBBBA gives small businesses new tools to care for their people, modernize benefits, and stay compliant with evolving rules. Whether you’re updating your open enrollment strategy or building a more competitive benefits package, these updates can make a real impact.
Need help sorting through the changes or making a plan?
My Business Resource is here to help you make the most of what’s new.