The 2017 Tax Cuts and Jobs Act (TCJA), enacted during the Trump administration, significantly altered the federal tax landscape. While the law didn’t directly address compensation for hours worked beyond the standard 40-hour week, its broad impact on corporate and individual income taxes indirectly influenced the financial implications of such compensation.
The TCJA’s substantial reduction in the corporate tax rate, from 35% to 21%, increased corporate profitability. This change potentially allowed businesses greater financial flexibility, which could indirectly affect decisions related to employee compensation, including incentivizing additional work hours or providing bonuses that might impact such worker pay. Furthermore, individual income tax rate reductions and changes to deductions influenced the after-tax income of individuals, potentially impacting their financial motivations related to seeking or declining additional work hours.
