How the Big Beautiful Bill Affects Employers and Employees (August 2025 TogetHR Times)
How the Big Beautiful Bill Affects Employers and Employees
By Alison T. Bruns
On July 4, 2025, President Trump signed into law H.R. 1 – The One Big Beautiful Bill Act (commonly referred to as the Big Beautiful Bill). This sweeping legislation touches nearly every sector of the U.S. economy and brings significant changes to tax policy, employee benefits, social safety net programs, and federal spending priorities.
This guide aims to assist our clients and their employees in understanding what this legislation means—not just politically, but practically. Below is a summary of the key provisions that directly affect employers and workers, along with our take on what to expect, and how to prepare.
Tax Reform That Hits the Paycheck
What Changed:
The individual income tax cuts from the 2017 Tax Cuts and Jobs Act are now permanent.
The standard deduction has increased by $1,000 (single) and $2,000 (married).
The Child Tax Credit increases to $2,500 per child through 2028.
Overtime pay and tips are now federally tax-exempt (up to a threshold).
Impact for Employers:
Payroll systems and withholding calculations must be updated. Businesses with large numbers of tipped employees or frequent overtime (hospitality, retail, logistics) should review compensation structures and ensure compliance.
Impact for Employees:
Most employees—particularly hourly and tipped workers—can expect an increase in take-home pay. Families will also benefit from enhanced tax credits.
SNAP and Medicaid Reforms – Hidden Workforce Impacts
What Changed:
New work requirements for SNAP (Supplemental Nutrition Assistance Program) recipients.
Tighter Medicaid eligibility reviews and income thresholds.
A five-year wait for green card holders to access Medicaid.
Medicaid provider restrictions, including defunding of Planned Parenthood.
Impact for Employers:
These provisions may increase financial stress for low-wage employees or part-time workers, potentially affecting retention, engagement, and attendance. HR teams may field more questions about benefits and support options.
Impact for Employees:
Some employees who rely on SNAP or Medicaid may lose benefits or need to complete additional administrative steps to stay eligible. This could lead to confusion, reduced healthcare access, and increased out-of-pocket costs.
What You Can Do:
Consider offering employee assistance programs (EAPs), financial wellness tools, or benefits navigation services to support those impacted.
Federal Spending Shifts – Growth in Certain Sectors
What Changed:
Expanded federal funding for defense, military infrastructure, NASA, and agriculture.
New job creation initiatives tied to space exploration, U.S.-based manufacturing, and rural development.
Impact for Employers:
Businesses operating in aerospace, engineering, farming, or government contracting may see new funding opportunities, grant programs, or workforce needs.
Impact for Employees:
Skilled trades, STEM professionals, and rural workers may see increased demand, training opportunities, and job growth.
Compliance and Payroll Administration: Time to Update
With these sweeping reforms come compliance obligations for businesses of all sizes.
What Employers Need to Do:
Update payroll systems to reflect new withholding rules and tax exemptions.
Review and revise employee onboarding documents, pay statements, and benefit materials.
Ensure HR teams are aware of changes that may affect employee eligibility for public programs.
Our Recommendation:
This is an ideal time to conduct a mid-year payroll audit, retrain payroll/HR staff, and communicate upcoming changes to employees clearly and proactively.
Communication is Key—Especially for Frontline Teams
Even positive changes, like increased take-home pay, can create confusion if not communicated well. And for those impacted by benefit program cuts, anxiety can quickly build.
Consider the following:
Provide clear, employee-friendly explanations of changes on pay stubs.
Offer Q&A sessions or email updates to answer common employee concerns.
Train managers and HR staff to handle sensitive conversations with empathy and clarity.
Final Thoughts
The Big Beautiful Bill represents one of the most comprehensive federal legislative packages in years. It brings significant benefits to many workers and families—particularly through tax relief and increased job opportunities—but it also creates new administrative challenges for employers and potential hardships for lower-wage employees navigating tighter public assistance rules.
As your HR and payroll consulting partner, we’re here to guide you through the changes. From system updates and policy reviews to employee communication and compliance support, we’ll ensure your business is ready—and your people are informed.
