On July 4, 2025, President Trump signed the “One Big Beautiful Bill Act” (OBBBA) into law. Spanning over 1,100 pages, the OBBBA introduces major reforms affecting employers and employees alike. Full text available here.
Key Provisions Impacting Employers
Taxation & Staffing
- Certain income levels are now exempt from federal taxation on overtime and tips.
- Expanded ICE funding may influence employer reporting and staffing practices.
Healthcare & Medicaid
- Medicaid eligibility changes will indirectly affect employers, especially in verifying employee hours and employment status.
- New work requirements for Medicaid begin January 1, 2027:
- Able-bodied adults (ages 19–64) must work at least 80 hours/month.
- Exemptions include pregnant women, caregivers of children under 13, tribal members, and those with serious medical conditions.
- States must verify eligibility within three months of application and every six months thereafter (previously annual).
Noncitizen Eligibility
- Effective October 1, 2026, Medicaid eligibility is restricted to Lawful Permanent Residents, select parolees, and citizens of Freely Associated States.
- Refugees and asylees are no longer eligible.
SNAP Work Requirements
- OBBBA removes exemptions for homeless individuals and veterans.
- Raises age exemption from 55 to 64.
- Eliminates exemptions for those with dependents over age 13.
- Reduces state flexibility to waive work requirements in high-unemployment areas.
State-Level Response
States with employee-friendly policies may introduce countermeasures. For example, New Jersey Governor Phil Murphy issued an Executive Order on July 23 directing agencies to assess OBBBA’s impact and propose legislative responses by October 1, 2025.
Employer Action Steps
Employers should prepare for:
- Increased administrative responsibilities.
- Adjustments to onboarding, payroll, and benefits processes.
- Potential state-level mandates in response to OBBBA.
Stay informed and ensure compliance readiness as implementation dates approach.
