Excise Tax Planning

Tax-exempt organizations may face increased costs due to excise taxes introduced as part of the Tax Cuts and Jobs Act of 2017. Our insights support planning efforts by considering excise tax implications in the context of an organization's compensation strategies, talent attraction, engagement and retention, and other objectives.

Insights for compensation program design

The excise tax is one of many factors that influence the appropriateness and effectiveness of compensation strategies to attract, retain and motivate leaders. Through careful planning, our advisers help organizations understand the impact of the excise tax and place it in a broader context to assess implications for program design.

Asking the right questions to get the right answers

Organizations should address the following questions as they consider the impact of the excise taxes on their compensation program:

  • What is our excise tax exposure over the next few years? How might this evolve with changes in the leadership team?
  • How do the organization structure and employment models impact the number of “covered employees” with compensation subject to the excise tax?
  • Are there specific programs that impact excise taxes, such as deferred compensation?
  • What changes can be made to plan for the implication of the excise taxes? How would these changes impact the organization and individual leaders?
  • How should the compensation program be governed going forward in light of excise tax rules? How does this impact the compensation decision-making process?
  • What is the impact of the excise tax on separation arrangements? Should changes be considered?

The excise tax rules have added to the complexity of compensation oversight and decision-making. Through an understanding of our clients’ programs and talent management objectives,  SullivanCotter can assist by providing relevant insights and practical, effective solutions.

Related Research and Insights

Contact us to learn how SullivanCotter can put its expertise and insight to work for you.

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