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Client Alert: Executive Compensation Tax Change

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Deduction Limitation Expanded

Action Items

On December 22, 2017, President Trump signed into law the 2017 Tax Cuts and Jobs Act ("the Act"). The Act will significantly reduce the corporate tax rate and lower individual tax rates. The key executive compensation change resulting from the Act is an expansion of the Internal Revenue Code’s $1.0 million compensation deduction limit. For an overview of the changes to Code Section 162(m), please see our December 7, 2017 Client Alert, Proposed Tax Changes Would Expand Compensation Deduction Limit.

In addition to the expansion of the 162(m) deduction limitation, the Act provides two other executive compensation related changes worth noting.

We expect the Internal Revenue Service will issue guidance with respect to these changes in the coming months. As such, we recommend all companies continue to monitor the implementation of these new rules.

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Please call us if you would like to discuss any of these issues or if we can otherwise be of assistance.


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