By now, you’ve heard the news that the corporate tax rate has been slashed from 35% to 21% and that many companies have been showering their employees with bonuses as a result. However, have you given thought to how the new tax laws can benefit your company?
While everyone appreciates an unexpected perk, there are ways to leverage the new tax reform that can have even longer lasting benefits for your staffers than a one-time bonus check. In fact, according to the 2018 Willis Towers Watson Survey on the Impact of Tax Reform, 31 percent of large and midsize U.S. employers have taken at least one action regarding their benefit programs; 66 percent said they have made or are considering making changes to their benefit programs.
Among the changes being considered as per the survey are: Expanding personal financial planning benefits (34%), increasing 401(k) contributions (26%), and increasing or accelerating defined benefit pension plan contributions (19%).
Companies are realizing that investing in great benefits now can help them recruit and hire top talent and encourage current employees to stay. And if you’re looking to boost your bottom line, improving recruitment and retention are effective ways to do so.
Which Companies are Leading the Way With Tax-Cut Inspired Benefit Enhancements?
So far, most company announcements have involved bonuses, but there are a few corporations that have stepped up their benefit offerings as well. Here’s a sampling:
- Visa’s 200 percent match of an employee contribution will now be up to 5 percent of salary, compared with 3 percent previously.
- Disney said it plans to invest $50 million into education benefits that helps cover tuition payments for hourly employees.
- Starbucks was one of the first to announce that it has expanded its parental leave policy to include non-birth parents, with up to six weeks of paid leave when welcoming a new child.
- Boeing is investing $100 million toward workforce development, training and education for its employees.
- Chipotle announced in February that it will be offering expanded paid parental leave coverage for hourly managers and salaried employees.
Ready to Pay Your Tax Cut Forward?
As other employers are getting serious about how to use the tax windfall, it’s time for you to think of some ways that you can turn the short-term benefits of the recent tax reform into a long-term benefit for your company.
Why dole out a quick-fix bonus when you can get a bigger return by investing in your employees over the long term? Start by looking at your company’s budget and think about the ways in which you can reward your employees. Some ideas:
Improving your 401(k) matching program
One of the best ways to encourage your employees to contribute to their retirement accounts is to add or make improvements to your matching program. This shows that you care about your workers’ long-term wellbeing and helps them achieve an important financial goal amidst their other financial obligations.
Assisting with student loan repayment
One benefit gaining traction with companies trying to recruit and retain a talented workforce is student loan repayment assistance. With student loan debt reaching its highest levels, employers who are able to ease this financial burden for their staffers can set their benefits programs apart from competitors. This could prove to be a smart way to turn the tax reform windfall into a benefit that can help improve employees’ cash flow in the short-term and help them reduce the amount of interest they will pay over the life of the loan.
Speak to your employees to find out how many are carrying student loan debt. If there are a high number of employees with student loan debt, it could prove to be a good program to add. Here are some tips to help you figure out if student loan repayment is right for your company.
Offering educational reimbursements
Many professionals are eager to continue their schooling to increase their skills and advance in their careers, which is why companies that support educational endeavors attract top talent. Investing in education benefits like tuition reimbursement, scholarship programs for children of employees, or other forms of educational support can be great for business.
Providing better health and wellness benefits and perks
The new tax law also provides a partial tax credit to employers who offer wages to employees using The Family and Medical Leave Act to take time off. This presents another potential area for companies to step up their game, as Starbucks and Chipotle have.
Take a look at your own health and wellness offerings and compare it to other companies in your industry. Are you falling short? Are there areas in which you can improve?
With more and more companies announcing new employee bonuses, perks, and benefits because of tax reform, now is a perfect opportunity to invest in your greatest asset – your employees. While cutting a bonus check is a wonderful gesture, you may get more bang for your tax cut buck by giving your employees a benefit that they can appreciate beyond one pay period.
This article is not intended to constitute tax, financial or legal advice. We make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained here. Readers should consult their own attorneys or other tax or financial advisors to understand the tax, financial and legal consequences of any strategies mentioned in this article.