On December 20, 2017, Congress passed the 2017 Tax Act H.R. 1 (known as the Tax Cuts and Jobs Act). Two days later, President Trump signed the bill into law. The joint congressional committee also released a Joint Explanatory Statement. This document serves to shed light on the different reconciled tax bills passed earlier by the House and Senate and provides a list of provision explanations of the legislation.
Among the changes in this tax overhaul, businesses will likely take most interest in the reduced corporate tax rate and changes to the taxability of certain employee benefits and perks. The tax act also ends the individual mandate for healthcare coverage beginning in 2019 (the employer mandate still stands under the Affordable Care Act). HR can expect the tax act to impact several areas like paid leave and fringe benefits.
Since the bill became a law, many corporations have announced how they plan to use their savings to give back to employees and reinvest money into their companies. Aflac plans to expand its employee benefits and training programs, including a raised 401K match. Suntrust Banks, Inc. also plans to raise its 401K matching and offer cash incentives for employees who complete their in-house “financial fitness” program. Other companies boast increased wages and bonuses in the year ahead. Talent experts say this is a smart move on the part of companies looking to attract better talent, increase retention, and improve their overall brand as employers.
For more insight, SHRM recently released an article highlighting the key tax changes affecting employee benefits.