How does the Tax Cuts and Jobs Act (TCJA) affect corporate taxes?

The Tax Cuts and Jobs Act (TCJA) significantly altered the corporate tax landscape by reducing the corporate tax rate from 35% to 21%. This major change aimed to stimulate economic growth by allowing corporations to retain a larger portion of their profits. By lowering the tax burden on corporations, the TCJA encouraged investment and expansion, ultimately benefiting the overall economy.

This reduction in the corporate tax rate is viewed as a pivotal aspect of the TCJA, as it aligns the U.S. corporate tax rate more competitively with other countries, fostering a favorable business environment. Corporations benefit from reduced taxes on income, which can lead to increased cash flow for reinvestment, dividend payments, or corporate debt repayments.

While other provisions of the TCJA did involve changes to deductions and the introduction of a minimum tax, the reduction of the corporate tax rate is the most significant and well-known element of this legislation, making it the correct answer regarding the impact of the TCJA on corporate taxes.