When President Trump signed H.R. 1, a sweeping tax and spending bill, into law on July 4, the focus was largely on tax cuts and budget adjustments. But for federal employees, it marked the end of a tense legislative process—one that began with proposals to reshape civil service protections and retirement benefits.
Much of that never made it into the final bill. Thanks to the Senate’s reconciliation process and the use of the Byrd Rule, a number of provisions directly targeting federal employee rights were stripped out before the bill reached the president’s desk.
Here’s what federal workers need to know.
What Was in the Original House Version?
The original House-passed version of H.R. 1 included several provisions that federal employee unions and workforce advocates strongly opposed. These proposals included:
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Increased FERS contributions: Federal employees would have contributed a larger portion of their salary toward retirement.
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Reduced retirement benefits: Proposals included eliminating the FERS annuity supplement and changing the pension calculation formula from the “High-3” to a “High-5” salary average.
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At-will hiring model: New federal hires would have been required to make an “irrevocable election” to waive civil service protections in exchange for reduced retirement contributions.
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New Merit Systems Protection Board (MSPB) fees: A proposed $350 filing fee could have discouraged employees from appealing adverse actions.
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Changes to labor union funding: Limits on agency support for union dues and representation activities.
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Postal Service fleet cuts: Eliminating funding for electric vehicle purchases.
How the Byrd Rule Changed the Outcome
The Byrd Rule is a procedural check used in Senate budget reconciliation. It blocks provisions that are considered “extraneous” to federal spending or revenue. In this case, it removed many of the original bill’s workforce-related proposals.
The Senate stripped out:
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Changes to FERS contributions and pension formulas
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The at-will employment requirement for new hires
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The MSPB appeal fee
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Provisions affecting federal labor unions
These changes were welcomed by federal workforce organizations, who argued the original provisions would have weakened the merit-based civil service and made it harder to recruit and retain qualified talent across government.
What’s Still in the Final Bill?
While the most significant changes to federal employee rights were removed, H.R. 1 still includes indirect impacts on federal workers:
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OPM-dependent verification: A new mandate requires OPM to audit dependent eligibility for the Federal Employees Health Benefits (FEHB) program. Agencies and HR offices should prepare for increased documentation requests and system changes.
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Agency funding shifts:
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Defense, Homeland Security, and Border Protection received major funding increases, which could translate into new hiring and expanded contracting.
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Environmental and land management programs, including the EPA, GSA “green” initiatives, and National Park Service, saw funding rescissions that may lead to workforce reductions or hiring slowdowns.
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Tax policy updates: While not exclusive to federal employees, the bill extends individual income tax cuts and makes changes that could increase take-home pay for many government workers—especially those earning overtime.
What Didn’t Happen
Notably, the bill does not include any revival of Schedule F, the controversial 2020 executive order aimed at reclassifying civil servants. It also doesn’t authorize reductions-in-force (RIFs) or introduce across-the-board benefit cuts.
While civil service reform continues to be debated in policy and political circles, those broader changes remain tied to executive orders—not this legislation.
Stay Informed
For federal workers, the final version of H.R. 1 avoided the most sweeping personnel changes initially proposed in the House. Thanks to the Byrd Rule and Senate negotiations, key protections around retirement, union access, and job security were preserved—at least for now.
Still, with agency-level budget changes and new mandates like the FEHB verification program on the horizon, federal employees should stay informed and prepare for adjustments within their departments.
This time, the most important changes may be the ones that never made it into the final bill.
