Employer-provided fringe benefits in the OBBBA: Six things taxpayers should know

The One Big Beautiful Bill Act (OBBBA) (P.L. 119-21) made noteworthy changes to common employer-provided fringe benefits. Here are six planning considerations for employers:

1. Employer-provided student loan payment assistance

The Tax Cuts and Jobs Act (TCJA) permitted employers to make non-taxable contributions towards employees’ student loan payments under Internal Revenue Code (IRC) section 127. The OBBBA makes this exclusion permanent. In addition, OBBBA indexes the maximum educational assistance exclusion of $5,250 for inflation after 2026.

Planning consideration: Employers may consider reviewing and updating their educational assistance plans for inclusion of employees’ student loan payments and track the inflation adjustment for 2026.

2. Employer-provided reimbursement of qualified moving expenses

The TCJA temporarily suspended the deduction for qualified moving expenses under IRC section 217 and the corresponding exclusion from income under IRC section 132(g) through 2025. The OBBBA permanently eliminates the deduction and income exclusion, except for members of the armed forces or intelligence community.

Planning consideration: Employers should review their relocation policies for federal tax compliance and continue to treat moving expense reimbursements as taxable compensation to employees.

3. Employer-provided reimbursement of qualified transportation expenses

Prior to the TCJA, qualified bicycle commuting expenses reimbursements were excluded from employees’ income. The TCJA eliminated this exclusion through 2025. The OBBBA permanently eliminates this exclusion. In addition, the OBBBA modifies the inflation adjustment for the limitation on qualified transportation fringe benefits under IRC section 132(f).

Planning consideration: Employers should continue to treat bicycle commuting reimbursements as taxable and review policies to ensure compliance.

4. Employer-provided meals

The TCJA reduced the corporate deduction for food and beverages provided to employees to 50%. The OBBBA disallows any deduction after 2025. There are some exceptions for the fishing industry.