Let’s review some parts of the “One Big Beautiful Bill Act” that may have an effect on employers.
- Independent Contractors: Currently, employers must file an information return (i.e., Forms 1099-NEC and 1099-MISC) if they make payments to non-employees (e.g., independent contractors) totaling $600 or more.The Act increases this threshold from $600 to $2,000 beginning in 2026, with adjustments for inflation beginning in 2027.
- Overtime & Tips: The Act allows individuals to take a deduction for any “qualified tips” received during the taxable year and for “qualified overtime compensation.” The deduction is limited to $25,000 for tips and $12,500 for overtime.
- Dependent Care: The Act increases the maximum annual exclusion for dependent care flexible spending accounts from $5,000 to $7,500 for individuals (or $3,750 for separate returns filed by married individuals).
- Telehealth: The Act makes the safe harbor for telehealth services (allowing coverage before the deductible without impacting HSA eligibility) permanent.
- PFML: The Act makes the employer tax credit for paid family and medical leave (PFML) permanent and expands its scope. Employers may continue to get a credit for wages paid, but can now also get a tax credit for a portion of insurance premiums paid for employees using PFML. Employers in states that require PFML are also now eligible for a credit.
- Immigration: The Act allocates increased funding toward immigration and border enforcement, possibly increasing the occurrence of I-9 audits. Various immigration-related fees are established or increased, such as a $550 fee for Employment Authorization Documents.
You can access the OBBB ,here.