2017 Tax Act Impact on Employee Benefits and Executive Compensation

This practice note discusses the impact that tax reform legislation enacted in late 2017, informally known as the Tax Cuts and Jobs Act (Pub. L. No. 115-97) (the Tax Act), on the area of executive compensation and employee benefits. The main changes primarily focus on (1) the non-deductibility of “excessive” employee compensation by publicly held corporations under Section 162(m) of the Internal Revenue Code, (2) a new tax deferral option for certain qualified equity grants by private corporations, (3) the imposition of a new excise tax on “excessive” compensation paid by tax-exempt organizations, and (4) a few adjustments to existing tax-advantaged benefits provisions.