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The Republican-controlled Congress passed, and President Donald J. Trump signed into law, the Tax Cuts and Jobs Act (Public Law No. 115-97) on December 22. The $1.5 trillion tax package brings big changes to the he Internal Revenue Code (IRC), including new tax brackets for individuals, companies and pass-through organizations. In addition, due to the direct advocacy by SHRM and other groups, proposals to eliminate the tax-free treatment of several employee benefits were dropped from the final legislation, representing big wins for HR, employers and employees. Those include:
Several other provisions opposed by SHRM were omitted from the final agreement, including:
However, several changes to employer-sponsored benefits were included in the tax reform law. Specifically, organizations that currently offer moving, parking/transit or biking benefits, as well as meals or an onsite gym, will need to be aware that the tax treatment of these benefits will be changing, effective December 31, 2017. These benefits are no longer a deductible business expense for for-profit companies. While employees won't pay tax on employer-provided meals, gyms or parking/transit benefits, they will have to include moving benefits and biking subsidies in their taxable income.
The tax bill also altered the individual insurance mandate under the Affordable Care Act, reducing the penalty to zero. While there is not a direct impact on employers, this change may have implications for the stability of the insurance marketplace and will likely cause employer-based health care insurance premiums to increase as healthy participants may now opt out of coverage.
Led by its co-chair SHRM, the Coalition to Preserve Employer-Provided Education Assistance successfully executed a multifaceted advocacy campaign during the tax reform process that utilized earned and paid media and leveraged SHRM's thought leadership on a variety of tax-related issues.
Many of the provisions in the new law will apply to tax years beginning after December 31, 2017. View a side-by-side comparison of the House-passed bill, Senate-passed bill and final agreement enacted into law (including all effective dates).
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