House Includes Workplace-Related Provisions in Budget Reconciliation

House Republicans passed the “One Big Beautiful Bill Act,” a broad budget reconciliation package, by a vote of 215 to 214 on May 22, 2025. While the bill must now be considered by the Senate where it will undergo changes, we are keeping our eyes on several provisions affecting the workplace:  

• Tax relief for workers: A full, temporary deduction for tips and overtime pay, allowing employees to exclude this compensation from taxable income through year-end 2028. 

• Permanent paid leave credit: The employer tax credit for paid family and medical leave would be made permanent. 

• Student loan repayment benefit expansion: Employer-provided educational assistance would permanently include student loan repayment, with the $5,250 annual cap indexed for inflation beginning in 2026. 

• Health care flexibility: Expanded eligibility and usability for Health Savings Accounts (HSAs), Individual Coverage Health Reimbursement Arrangements (ICHRAs), and Direct Primary Care (DPC) models. 

• AI regulation ban: A 10-year moratorium on state and local government regulations of artificial intelligence technologies. 

• Change to the Section 162(m) executive compensation rules: Compensation paid across all entities within a company’s controlled group must now be aggregated when applying the $1 million deductibility cap. This means total compensation to a covered executive—regardless of which affiliated entity pays it—will count toward the limit, potentially expanding the number of executives affected.

What’s next: Republican House and Senate leaders are hoping to pass a final bill by July 4. Under the budget reconciliation process, legislation is not subject to a Senate filibuster and can pass with a simple majority (51 votes), but only if all its provisions have a direct impact on the federal budget. 

• This means that some of the policy provisions (e.g., AI regulation moratorium) could be removed during Senate review.

• We will closely monitor the bill’s progress and provide updates on any workplace-related provisions included in the final package.