Federal Budget Reconciliation Bill Changes HSA Rules and Impacts Income Taxes
On July 4, 2025, President Donald Trump signed a comprehensive budget reconciliation bill into law, loosening rules around health savings accounts (HSAs), extending telehealth relief, and providing additional income tax relief for tips, overtime pay, and some popular employee fringe benefits. Quick Hits The budget reconciliation bill makes important changes to health savings account (HSA) eligibility and reimbursements, including retroactively restoring the telehealth relief provided by the CARES Act. It also addresses tax relief provided to several fringe benefits. The law also eliminates income taxes on tips and overtime pay. Coverage for Telehealth Services The law makes permanent the telehealth provisions from the CARES Act in 2020 and subsequent guidance that allow high-deductible health plans (HDHPs) to cover telehealth and other remote medical services before the deductible and still qualify as an HSA-eligible plan . This provision had expired at the end o...