If you’ve returned to work after taking time off for the holidays and noticed some things missing, you’re probably right.
President Donald Trump’s signature tax and spending package trimmed company tax deductions for certain things, forcing companies to weigh whether to continue offering some workplace perks. Tax deductions changed for snacks and meals and charitable giving, while deductions for bicycle commuting benefits and most moving expenses were permanently eliminated, for example.
Many Americans were probably caught off guard. Most know about major tax provisions that affect them directly, like no tax on tips and overtime, or the extra senior deduction, but didn’t pay attention to corporate changes. However, some of those changes can impact compensation and benefits for mid- and larger-sized employers that are helping to pay for the headline-making tax provisions, tax experts said.
“Companies evaluated how the changes impacted business and what benefits they can or can’t offer anymore,” said Miklos Ringbauer, a certified public accountant in Los Angeles.
Starting this year, businesses must clear a 1% hurdle before they can start taking charitable deductions. Deductions remain capped at 10% of taxable income.
Amounts above the 10% limit, as well as the 1% floor amount, can be carried over and deducted for five years. Otherwise, the amount from the 1% floor is lost forever.
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If a company’s 1% floor is $10,000 and donations reach $50,000, the company can deduct $40,000 and carry over $0. If donations hit $110,000, the company can deduct $90,000 and carry over $20,000.
The 1% floor is also “important from a numeric standpoint because it happens to coincide with the same number of what companies have given to charity year in and year out since the 1990s – 1% of taxable income,” said Joe Phoenix, chief executive of giving platform Givinga. “What we’re watching is how corporate America responds.”
Congress’s Joint Committee on Taxation (JCT) estimated the new floor will generate approximately $16.6 billion in federal tax revenue over 10 years.
The fear is that the lost incentive to give will prompt companies to pull back corporate giving, including eliminating corporate matches for employees. Research commissioned by the Independent Sector estimates an average annual reduction in corporate charitable giving of approximately $4.5 billion.
The 1% floor “effectively penalizes low-to-moderate corporate philanthropy,” wrote Jake Wood, chief executive at giving platform Groundswell, in a LinkedIn post. “So, a company that has tight margins and only donates 0.5% of its revenue to charity can no longer deduct that amount. What do we think they’re going to do, double their giving? Almost zero chance.”
So far, Mark Gallegos, partner at accounting firm PorteBrown, said companies he’s worked with haven’t pulled back on giving. Lost charitable giving deductions can be made up by other provisions that benefit companies, he said.
The 100% bonus depreciation deduction was permanently restored for qualifying assets and expanded to new categories of property retroactive to 2025, and the cap for small and mid-sized businesses to immediately deduct for assets purchased and placed into service doubled to $2.5 million, for example.
Plus, the floor only applies to C-corporations, which make up the smallest percentage of businesses, Gallegos noted. The Tax Foundation estimated that sole proprietorships in 2014 accounted for 69.8% of all private businesses, compared to 8.1% for C-corporations.
The business deduction for the cost of food provided to employees expired on Dec. 31. That means any food or stipend given to workers to pay for food is now taxed, forcing companies to reevaluate whether to keep that perk.
According to the 2025 Society of Human Resource Management Employee Benefits Survey, 44% of companies surveyed said they provided free snacks and beverages, while 78% offered free coffee and 10% had free or subsidized company meals in an on-site cafeteria. JCT estimated that eliminating the deduction would raise more than $32 billion in additional taxes on employers through 2034.
Many companies, especially gigantic ones like Google, probably won’t eliminate their meal offerings because studies show food perks draw people to the office and make them work harder. According to food ordering platform ezCater’s data, two of three workers said free food makes them more productive and 54% call free or subsidized meals their most appreciated work perk.
Instead, businesses may scale back their offerings or offer less luxurious spreads, experts said.
Deductions for bike commuting and moving expenses have been permanently eliminated. Employers can no longer reduce their federal tax bill by reimbursing employees $20 per month to ride their bikes to and from work or paying for an employee to move for work. The moving expense deduction is now exclusively for qualifying active-duty members of the Armed Forces and members of the intelligence community.
In 2017, some experts estimated that the commuting benefit cost the government $5 million annually. The JCT forecasts saving $852 million over 10 years from the limited moving expense deduction.
Eliminating deductions for moving means the cost is taxable to the company and employee. This “continues to catch employers and employees off guard,” the law firm, Cromwell, wrote in a post. “Payments are subject to all applicable withholding taxes, often leading employers to either increase the amount payable for moving expenses or to discuss the tax consequences with the employee before the payments are made.”
Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
This article originally appeared on USA TODAY: Is your company skimping on employee benefits? Why you may be right
