Provisions from the budget reconciliation bill (HR 1: One Big Beautiful Bill Act), affecting benefits provisions in 2026, are described below.

📌 Bicycle Commuter Reimbursement Exclusion

Tax-free reimbursements to employees for qualified commuting expenses for bicycles, previously excluded for tax years 2018 through 2025, is indefinitely excluded. As a result, employers can’t reinstate bicycle commuter expenses as a tax-free benefit again in 2026 and need to amend their fringe benefits documents if they included the previous temporary exclusion dates.

📌 Dependent Care Flexible Spending Account Limit

The dependent care flexible sending account (DCFSA) annual contribution limit will increase to $7,500 for plan years beginning in 2026.

Increasing the limit is optional for employers; however, employers offering a DCFSA that want to take advantage of the increase should update their cafeteria and benefits plan documents and notify employees prior to the start of their 2026 plan year.

📌 Direct Primary Care Service Arrangements

Beginning January 1, 2026, certain direct primary care service arrangements (a contract between an individual and primary care physicians for care for a monthly fee) will not prohibit an employee from contributing to a health savings account (HSA). Employees may use their HSA to pay the monthly cost of direct primary care service arrangements that meet certain qualifications (e.g., a monthly fee of $150 or less for one person).

HR 1 was signed by the President on July 4, 2025.