One Big Beautiful bill: What employers need to know

On July 4, 2025, President Donald Trump signed “One Big Beautiful Bill” into law. This budget reconciliation legislation includes several provisions employers should know about. We’re providing this brief, employer-focused summary for those who don’t want to read the bill’s nearly 900 pages.

Key provisions

Enhanced employer-provided childcare credit

The bill increases the tax credit for employers that provide childcare assistance to $500,000 ($600,000 in the case of eligible small businesses) from the previous $150,000 threshold, helping address the challenges working parents face. The measure is intended to encourage employers to add childcare benefits in an effort to reduce absenteeism and increase retention.

Paid family and medical leave tax credit

The bill extends and enhances the tax credit for employers offering paid family and medical leave. Again, the goal is to encourage employers to provide or expand paid leave benefits, with the aim of promoting families and improving talent attraction and retention.

Expanded 529 account usage

The bill allows 529 education savings plans to cover expenses for postsecondary industry-recognized credentialing programs for employees and the related continuing education to maintain the credential. The goal is to support employee upskilling and reskilling initiatives, aligning workforce skills with evolving business needs.

Dependent care flexible spending account (FSA) increase

In addition to expanding the employer-provided childcare credit, the bill also increases the dependent care FSA limit for employees to $7,500 ($3,750 for married couples filing separately). This change provides employees with the ability to set aside a greater amount of pretax dollars for child care, with the goal of reducing the childcare cost burden on working parents.

Permanent employer student loan repayment exclusion

The bill makes permanent the exclusion of employer-paid student loan repayments from employees’ taxable income (I.R.C. Section 127), with adjustments for inflation. This is employer-funded student loan forgiveness and is a valuable benefit to employees, aiding in recruitment and retention efforts.

Summary (pun intended)

The bill is so large that even Congress got a summary—and we’ve provided a link here in case you’d like to read more.

David T. Barton and David Sieck are attorneys with Fennemore Law’s employment and labor practice group in Phoenix. Barton focuses his practice on representing employers in matters involving discrimination, harassment, wrongful termination, and wage and hour disputes, offering strategic counsel on compliance, risk management, and litigation defense. Sieck’s practice focuses on legal services for joint labor management trust funds and employee benefit plans, with deep expertise in the Employee Retirement Income Security Act (ERISA), the Internal Revenue Code, and the Taft-Hartley Act. Together, they provide comprehensive representation to clients navigating complex employment and benefits-related legal issues. You can reach them at dbarton@fennemorelaw.com and dsieck@fennemorelaw.com.