7/1/25 Important Tax and Employee Benefits Provisions to Watch in the Senate Tax Bill Negotiations

July 1, 2025

By Jeff Robertson  &  Iris Tilley

H.R.1, entitled One Big Beautiful Bill Act, (the “Bill”) passed the U.S House of Representatives on May 25, 2025 and is now under negotiation in the U.S. Senate. While the final terms of the Bill are yet to be seen, several notable trends regarding employee benefits have emerged.

 1. Health Savings Accounts and Health Reimbursement Arrangements will be a large part of the administration’s health plan focus going forward

The Bill continues the Administration’s focus and emphasis on health care accounts while limiting the Affordable Care Act. Specifically, the Bill includes expanded eligibility for HSA and HRA accounts, including Medicare eligible individuals. Additionally, the Bill contains expanded qualified expense categories. We can expect expanded regulatory encouragement for employers and individuals to establish health care accounts. This is a specific area to watch for planning purposes if health care premiums go up over the next year or two to unsustainable levels for some employers.

 2. Nonprofit Compensation Excise Tax

Effective as of the 2026 tax year, the Bill expands application of the existing excise tax on compensation paid over $1 million to former employees of nonprofit organizations. This change specifically targets severance compensation. Because many nonprofits utilize severance compensation to provide large historical benefits, this excise tax, if passed, must be considered in exit planning. In addition, the Bill adds back the 2019 repealed tax on parking and qualified transportation fringe benefits. For nonprofit employers considering future exit strategies, the excise tax may be an important consideration.

 3. Continuation of Employer Tax Credits

The Bill continues provisions related to tuition and student loan expenses and family leave credits which were otherwise set to expire. If your Company offers these benefits, the Bill provides some certainty going forward. 

 4. Provisions Impacting Health Plan Pharmacy Benefit Managers

The Trump administration continues its focus on transparency in pharmacy costs. The Bill enacts provisions regulating Pharmacy Benefit Managers and will have implications for employer sponsored health plans and their pharmacy programs, both in operation and with regard to document drafting.

 5.  Limited to No Impact on Employer Retirement Plans

Notably, the Bill does not address employer retirement plans. This indicates the potential of separate legislation akin to a Secure Act 3.0 and expanded regulatory provisions.  The Trump administration has highly encouraged Roth accounts and automatic enrollment.

The Barran Liebman Employee Benefits Group assists employers with retirement and health plans.  Please contact Jeff Robertson at 503-276-2140 or jrobertson@barran.com, or Iris Tilley at 503-276-2155 or itilley@barran.com, or your regular attorney at Barran Liebman if you have any questions.