The One Big Beautiful Bill: How Employers Should Prepare

2. Benefits Teams Must Rethink Strategy, Not Just Update Forms

The law raises the ceiling on Dependent Care Assistance Plans (DCAP) from $5,000 to $7,500 per household starting in 2026. This change supports working parents but also requires plan amendments and new communications during open enrollment.

• Another headline-grabbing addition: a federal IRA contribution for children born between Jan 1, 2025, and Jan 1, 2029. Employers can optionally contribute up to $2,500 annually to these accounts.
• Also included: New flexibility in Health Savings Account (HSA) eligibility. Telehealth-first plans, direct primary care offerings, and ACA bronze plans will now qualify for HSA contributions.

Shoemaker notes that this is an opportunity for benefits teams to rethink their offerings and ensure limit increases are communicated before this year’s open enrollment.  

3. Tax Credits are Expanding, but so is IRS Oversight

In addition to the employee-facing provisions, OBBBA contains meaningful updates on employers' financial strategies.

What’s new:

• The FICA tip credit is now available beyond restaurants—beauty industry employers (e.g., salons, barbershops) may now qualify.
• Tax credits for paid family leave and small-business R&D spending have been extended or made permanent.
• The Employee Retention Credit (ERC) is no longer eligible for claims postmarked after Jan 31, 2024.
• The IRS has an additional three years to audit certain claims, putting prior filings under more scrutiny.

Shoemaker explained that the ERC and IRS audit timeline changes are being made to minimize fraud. The new regulations penalize paid promoters who encourage ineligible employers to file claims they shouldn't have been eligible for.

This change, combined with an extended statute of limitations for IRS audits, signals increased enforcement. Employers should have proper documentation in place in case of an audit.

4. HR and Comms Teams Must Lead on Education 

The tip and overtime deductions don’t show up on employee paychecks. Workers will claim these when they file their 2025 tax returns in 2026. That delay creates a communication gap — and a risk of mistrust if employers don’t explain what’s happening. 

Given the complexities of the law, HR teams must stay informed about the latest regulatory updates and effectively communicate key details to employees in a clear and accessible manner.  

5. Compliance, Payroll, Legal, Finance, and HR Must Work Together

Successfully implementing the OBBBA isn’t a task you can assign to one department. It touches payroll systems, tax filings, benefit plan documents, employee training, and financial reporting.

Success will be achieved by organizations that treat this as a strategic cross-functional initiative, not a compliance fire drill.

OBBBA Checklist: What to Do Today

The One Big Beautiful Bill Act signals a new era of employer accountability, not just to the IRS, but to employees. It demands smarter systems, tighter coordination, and better employee experiences.

While this sprawling bill has many implications, here are a few key items to add to your to-do list.

Prepare with Paylocity

With the OBBBA introducing new tax rules, benefit structures, and workforce eligibility requirements, Paylocity can help employers adapt quickly and stay compliant. 

Our platform makes it easy to track and report on 

• Payroll software that makes it easy to track taxable benefits, overtime, and other pay elements impacted by the legislation.  
• Built-in compliance tools help ensure accurate payroll tax calculations under the updated thresholds.
• Robust reporting gives you a clear view of workforce data needed for audits, credits, and deductions. 

For employers impacted by new public benefit work requirements, our HR tools can help track hours, verify eligibility, and maintain the documentation necessary to meet regulatory standards.

Want to learn more? Request a demo today.