Last Updated on November 11, 2025 by MyHRConcierge

The One Big Beautiful Bill Act, or H.R. 1,  a sweeping legislative package dubbed the “Big Beautiful Bill,” has now cleared both chambers of Congress and was signed into law by President Trump on July 4, 2025. While the bill initially passed the House of Representatives on May 22, its final version includes substantial changes introduced by the Senate before House reapproval on July 3. No formal conference committee or traditional reconciliation process took place. These revisions have significant implications for businesses, healthcare providers, taxpayers and regulatory stakeholders.

On July 3, 2025, the House voted 218–214 to accept the Senate’s version without further amendments. Below is a breakdown of the most notable changes and additions made between the House and Senate versions, which remains in the final law, and what they mean for your organization.

Notable Provisions of the Big Beautiful Bill That May Affect Human Resource and Payroll Departments

The Workforce Pell Grant expansion, which extends eligibility to short-term, high-skill training programs (150–600 hours), was retained and even strengthened in the Senate version. Certain strict House limits- like excluding part‑time students or requiring 15 credits per term- were dropped in the Senate version

However, most other House-proposed reforms were removed during Senate negotiations. These include the creation of new “Trump” tax-advantaged savings accounts for education, housing and retirement, as well as expanded HSA and HRA flexibility. Specifically, provisions allowing Medicare Part A enrollees to contribute to HSAs, permitting spousal contributions to a shared HSA, expanding HSA-eligible expenses (like fitness programs), and enabling FSA/HRA conversions to HSAs were all cut from the final bill. Additionally, the Senate removed a provision that would have codified the use of Individual Coverage HRAs (ICHRAs) to reimburse employees for premiums on individual health insurance plans- meaning no changes to the existing rules around ICHRAs were made law.

Medicaid and Healthcare: Deeper Cuts and Accelerated Implementation

Healthcare reforms remained a point of contention and were significantly sharpened in the Senate version:

• More Aggressive Medicaid Reductions: The Senate adopted stricter work and eligibility requirements. The final legislation mandates that most non-disabled, working-age Medicaid recipients must actively meet work-related conditions to maintain coverage. These requirements include proof of:
  • Employment or actively seeking work
  • Enrollment in job training or educational programs
  • Participation in volunteer service or community engagement initiatives
• Faster Timeline: Unlike previous efforts that allowed for broader state discretion or gradual implementation, the Senate’s version nationalizes these mandates and accelerates the rollout date from 2028 to January 2027. States will be required to develop robust tracking and verification systems, and beneficiaries must regularly submit documentation to demonstrate compliance.
• Medicare Adjustments: The Senate eliminated several proposed Medicare reforms but included a new restriction on eligibility for undocumented immigrants, which is a policy absent from the House bill. This language, now enacted in the final version of the law, explicitly bars undocumented individuals- and, in some cases, certain legally present non-citizens- from qualifying for Medicare coverage.

Debt Ceiling and Fiscal Impact: A Higher Price Tag

The Senate version of the bill raised the national debt ceiling by $5 trillion, exceeding the House’s initial $4 trillion proposal.

This added cost reflects expanded corporate tax relief, faster implementation timelines, and trimmed offsets (such as reduced revenue from SALT cap increases or energy policy rollbacks).

Tax Provisions of the Big Beautiful Bill: Senate Tightens and Expands in Strategic Areas

One of the most impactful changes came in the form of revised tax provisions:

• No Tax on Overtime and Tips: One of the higher profile components of the bill relates to the no tax on tips or overtime component. In the final version signed by President Trump, the No Tax on Overtime was capped at $12,500 ($25,000 if filing a joint return) while the No Tax on Tips was capped at $25,000. Both deductions are set to expire on December 31, 2028.

UPDATE – 11/11/2015

The IRS and Treasury’s Notice 2025-62 provides transition-year relief: for tax year 2025 employers, payors and payment-settlement entities won’t be penalized under IRC §§6721/6722 for failing to separately report “qualified tips,” “qualified overtime,” or occupation codes- provided the overall return is otherwise complete and correct. This relief recognizes payroll and reporting systems may need time to adapt, but employers are still strongly encouraged to begin separating and documenting tip and overtime pay (e.g., on W-2 Box 14 or internal pay statements) to help employees claim deductions and to prepare for full enforcement in later years. Hospitality, service and payroll-heavy employers should use 2025 to update systems, communicate with staff and plan for compliance.

LEGAL UPDATE – 9/22/2025

The IRS has long clarified under Revenue Ruling 2012-18 that for a payment to qualify as a tip, it must meet certain conditions: the payment is voluntary, the customer has full control over the amount, it is not dictated by employer policy, and the customer typically chooses who receives it. If any of these elements are missing, the payment may be classified as a service charge, which is taxed differently.

Building on that framework, the Department of the Treasury released new proposed guidance and a significant tax change: from 2025 through 2028, eligible workers in restaurant and hospitality occupations may deduct up to $25,000 in “qualified tips” per year. Importantly, the Treasury emphasized that mandatory service charges do not qualify for this deduction, since they are not considered voluntary payments.

This distinction matters for restaurant operators who currently apply large-party service fees. Because those charges would not qualify as tips under the new rules, employers may begin reconsidering whether to shift away from mandatory service charges in order to ensure that employees’ income remains eligible for the “No Tax on Tips” deduction.

A public hearing on the proposed guidance is scheduled for October 23, 2025, and employers should follow these developments closely to ensure compliance with evolving payroll and tax requirements.

Permanent Tax Relief for Small Businesses

Since 2017, the Small Business Tax Deduction has empowered small businesses to deduct up to 20% of their income- a vital tool for growth and reinvestment. Without Congressional action, this deduction was set to expire at the end of 2025.

This legislation not only makes the 20% Small Business Deduction permanent, but it also delivers additional long-term wins for small businesses:

• Doubles Section 179 Expensing Cap: Increases the small business equipment expensing limit from $1.25 million to $2.5 million, allowing businesses to fully deduct qualifying purchases in the first year.
• Permanently Extends 2017 Marginal Tax Rate Cuts: Prevents looming increases to individual income tax rates, which are critical for the 90% of small businesses structured as pass-throughs.
• Expands and Makes Permanent the Estate Tax Exemption: Raises the exemption to $15 million for individuals and $30 million for joint filers, offering more security for family-owned businesses.

Planning and Compliance Urgency for Businesses

Employers everywhere (but particularly those in healthcare, hospitality and retail) must prepare for the coming changes. The new overtime deduction cap, modified Medicaid requirements and long-term tax relief will impact hiring decisions, compensation structures, and benefits planning.

A Transformational Legislative Package: The Big Beautiful Bill

The final version of the Big Beautiful Bill represents one of the most sweeping legislative changes in recent history, with far-reaching consequences for the tax code, healthcare policy, energy incentives and regulatory frameworks. While many businesses will welcome the clarity around tax cuts and reduced regulatory constraints, the speed and scope of Medicaid reforms and fiscal expansion present areas of concern.

For employers, the priority should be readiness: understanding the potential impact on your workforce while building agile strategies to adapt. For more insights or assistance with your organization’s HR strategy, handbooks or compliance efforts, contact MyHRConcierge today at ccooley@myhrconcierge.com, 855-538-6947 ext. 108. Or, schedule a free consultation below:

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