The Republican tax and policy bill that President Donald Trump has now signed into law contains various provisions that affect attorneys who handle employee benefits and executive compensation. The major takeaways from the bill are as follows:
No Changes to Existing Retirement and Health Tax Provisions
The most recent budget reconciliation bill made no changes to existing individual and business tax provisions concerning employer-sponsored health and retirement benefits plans. Although modification of these provisions could have been on the table to offset the bill’s tax cuts, much as they were during negotiations that led to the 2017 Tax Cuts and Jobs Act (TCJA), the expected cuts never materialized. Fears about “Rothification” (changing retirement contributions from pretax to after-tax), placing caps on the exclusion for employer-sponsored health coverage, and repealing the carried interest loophole evidently were unfounded. Many see the lack of changes as a significant victory.
Expanded Access to Telehealth
Another notable feature of the new tax bill is the permanent expansion of telehealth access. The bill restores pre-deductible telehealth access for individuals with high-deductible health plans, a COVID-19 pandemic-era provision that expired at the end of 2024. Furthermore, the provisions are retroactive to all plan years beginning after December 31, 2024.
Increased Ability to Use Direct Primary Care Arrangements
The tax bill also expands access to direct primary care arrangements. These arrangements allow individuals with high-deductible health plans to pay membership fees for access to a primary care physician. Participants can use their health savings account (HSA) to pay the membership fees for direct primary care arrangements. This provision also clarifies that individuals with high-deductible health plans who enter direct primary care arrangements are not participating in other healthcare plans. Otherwise, the participant would be disqualified from participating in HSAs. The provision also defines direct primary arrangements and limits the amount of monthly membership fees.
Limitation on Deduction for Highly Compensated Employees
More executive-level employees are now subject to the limitation on public company tax deductions for compensation above $1 million. Congress first established the deduction limit in the 1993 budget reconciliation bill, which applied to the top five highest-paid employees of public companies. The TCJA expanded the limitation, partially by rolling back an exception to the limitation for performance-based compensation. In 2021, Congress further expanded the limitation in the American Rescue Plan Act.
The exact changes to the limitation in the 2025 budget reconciliation bill will vary depending on the structure and plans of each company. Each company will have to take steps to identify which companies and subsidiaries are subject to the limitation.
Extension of the Paid Family Leave Tax Credit
Finally, the tax bill makes the paid family leave tax credit for private employers permanent. The credit consists of a general business tax credit for employers that voluntarily offer 12 weeks of paid family and medical leave for their employees. The 2017 TCJA initially authorized the tax credit for two years. Subsequent legislation extended the tax credit, which was scheduled to expire on January 1, 2026. The bill also clarifies how the rule applies to part-time employees.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.
Hall Benefits Law, LLC
Latest posts by Hall Benefits Law, LLC (see all)
- Colorado First State to Place Price Cap on Prescription Drug - November 27, 2025
