How HR 1 supports Main Street Americans

As the CEO of the National Association of Insurance and Financial Advisors, I have the privilege of representing thousands of financial professionals, in every community across the country, who work with the heart of the American economy - Main Street, not Wall Street. Every day, our members work with working families, small business owners and retirees who are doing everything they can to secure a better future.

That’s why I want to highlight provisions in the House budget reconciliation bill that stand to make a meaningful difference in the lives of everyday Americans. These aren’t abstract policy ideas; they’re practical changes that can help Americans save more, plan smarter and live with greater financial security.

Here’s how this legislation helps in four key areas: families, employers, health care and retirees.

A head start for every child

A forward leaning aspect of this legislation is the creation of new government-seeded savings accounts for children. Every child born in the U.S. would start life with a federally funded account, and families could contribute up to $5,000 per year to that account until the child turns 18.

For middle-income families, especially those living paycheck to paycheck, these accounts represent an opportunity to build generational wealth, something that’s often out of reach. Funds could be used for education, a down payment on a home or even to start a small business. In other words, these accounts help level the playing field and open the door to upward mobility.

In addition, the legislation expands the scope of 529 education plans for students and for those looking to advance or change careers, allowing withdrawals not just for college, but also for vocational training, licenses and certifications. This is a crucial win for those who may pursue skilled trades or professional paths outside of the traditional four-year degree.

Supporting working parents and small businesses

The legislation also takes important steps to support employer-provided benefits, which are a lifeline for working families.

First, it increases the child care tax deduction for employers from 25% to 40%, with an inflation-adjusted cap of $500,000, more for eligible small businesses. This makes it more attractive for employers to help employees cover the high cost of child care, which is often one of the biggest barriers to workforce participation.

Second, a new tax credit for paid family and medical leave allows employers to choose between a credit based on wages paid or on premiums paid into paid leave insurance programs. This flexibility helps small and midsized businesses offer benefits that are typically out of reach, helping them compete for talent and better support their employees.

Easing the burden of health care costs

Rising medical expenses are a top concern for many middle-income families, especially those without comprehensive employer-sponsored plans.

The new law raises the health savings account contribution limits to $4,300 for individuals and $8,550 for married couples, specifically for households earning $75,000 or less ($150,000 for couples). That’s a big step forward for working families who want to prepare for out-of-pocket costs, save on a tax-advantaged basis, and avoid dipping into credit when health issues arise.

It also broadens HSA eligibility by allowing more high-deductible health plans to qualify and permits both spouses to make catch-up contributions to the same account. These updates create a more flexible, family-friendly savings system.

Delivering tax relief to older Americans on modest incomes

For millions of older Americans living on fixed incomes, every dollar counts, especially when it comes to health care, housing and everyday expenses. This legislation takes an important step toward easing that burden by creating an enhanced $4,000 tax deduction for seniors with modified adjusted gross income under $75,000 (or $150,000 for joint filers) between 2025 and 2028.

Although it’s not a full repeal of taxes on Social Security benefits - something that can’t be done under current budget rules - it is a meaningful proxy that provides targeted tax relief for lower- and middle-income retirees.

It acknowledges a reality our members see every day: many seniors are being taxed on income they rely on just to make ends meet. This deduction helps preserve more of their Social Security and retirement savings — putting money back into the pockets of those who’ve spent decades contributing to our economy.

These provisions are not silver bullets, but they are meaningful steps in the right direction. As the debate around the bill continues, NAIFA will continue to advocate for solutions that work for the millions of Americans working every day to build better lives for themselves and their families.

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Kevin Mayeux, CAE, is NAIFA’s CEO. Contact him at [email protected].