How Will Employers Be Impacted by the Big Beautiful Bill? Key Provisions in the New Budget Checklist

By: Davis C. Bae, Sheldon J. Blumling, Ted Boehm, Benjamin M. Ebbink, David S. Jones, and Jennifer S. Kiesewetter, Fisher & Phillips LLP

The following article is a summary of the full checklist, available to Practical Guidance subscribers by following this link. Not yet a Practical Guidance subscriber? Sign up for a free trial here.

The complete checklist is written by Davis C. Bae, Sheldon J. Blumling, Ted Boehm, Benjamin M. Ebbink, David S. Jones, and Jennifer S. Kiesewetter, Fisher & Phillips LLP.

This checklist covers several major policy changes affecting workers, employers, and workplace compliance under recent federal legislation. It explains new federal tax exemptions that allow tipped and hourly employees to deduct portions of their overtime and tip income, a change aimed at strengthening recruitment and retention in industries such as hospitality. It also describes the introduction of stricter Medicaid work requirements requiring certain adults to complete at least 80 hours per month of employment or related qualifying activities, a shift that may influence both employee health coverage and labor force participation.

This checklist outlines multiple expansions to Health Savings Accounts, including permanent permission for pre-deductible telehealth coverage, the ability to use HSA funds for direct primary care arrangements, and newly extended HSA eligibility for individuals enrolled in ACA bronze and catastrophic plans. In addition, it notes the first increase in the dependent care FSA contribution limit in decades, raising it to $7,500 beginning in 2026. The legislation also significantly boosts funding for Immigration and Customs Enforcement, anticipating heightened workplace audits, inspections, and enforcement actions across several industries.

The checklist also addresses a substantial expansion of Immigration and Customs Enforcement (ICE) funding, which is expected to significantly intensify federal immigration enforcement activity. With ICE’s budget tripled and thousands of new enforcement personnel anticipated, the legislation signals a major increase in workplace-focused actions such as audits, I-9 inspections, and worksite raids. These efforts are expected to concentrate in industries that rely heavily on immigrant labor, including agriculture, construction, hospitality, manufacturing, and retail. As a result, employers are encouraged to strengthen compliance programs, prepare internal protocols for potential enforcement events, and proactively assess their immigration-related risks.

Lastly, the checklist highlights what the bill did not include—a proposed pause on state-level artificial intelligence legislation—meaning states will continue to develop their own AI regulatory measures even as federal lawmakers consider standalone approaches.