Walmart announced that it is increasing the minimum wage for its workers to $11 after Congress passed a tax reform bill that lowered individual and corporate rates.
The retail giant will also hand out bonuses of up to $1000 to a large number of its employees.
The company also announced it is expanding its maternity and parental leave policy in response to the tax cuts.
“We are early in the stages of assessing the opportunities tax reform creates for us to invest in our customers and associates and to further strengthen our business, all of which should benefit our shareholders,” said Walmart president and CEO Doug McMillon in a statement.
The increase in wages will start in February and is estimated to cost the company $300 million for this fiscal year. The one-time bonuses are costing around $400 million.
President Donald Trump signed the bill, which was passed by a Republican House and Senate, into law on Dec. 22.
Not a single Democrat in the House and Senate voted in favor of the bill.
The tax overhaul lowers the corporate tax rate from 35 percent to 21 percent. This is below the 22.5 percent average worldwide corporate tax rate.
The reduction in the corporate tax rate will restore the nation’s competitive edge and level the playing field for U.S. companies, according to Republicans and many economists.
“This is the biggest tax cut and reform in the history of our country. This is bigger than, actually, President Reagan’s many years ago,” Trump said at the White House on Dec. 22.
In response to the tax cuts, multiple companies have announced increases in wages and bonuses for their employees.
What Tax Cuts Mean For Individuals
The bill reduces the individual tax rates while keeping the existing seven tax brackets. The rates are set at 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent.
The new plan narrows itemized deductions to simplify the tax code. However, it nearly doubles the standard deduction for individuals from $6,350 to $12,000 and for married couples filing jointly from $12,700 to $24,000.
According to Republican leaders, this provision will simplify tax filing and enable nine out of 10 people to fill their taxes on a form so simple it could fit on a postcard. This coming April 15 will be the last time Americans will file their taxes under the existing tax code.
The bill expands the child tax credit from $1,000 to $2,000 for both individuals and married couples filing jointly. The tax credit will be fully refundable up to $1,400, which means the credit can be used to increase or create a tax refund.
The child tax credit starts to phase out for families with income over $400,000. Under the current law, it phases out at $110,000 in income for married couples.
Many individual income tax provisions, including the child tax credit, will expire by the end of 2025, and the old rules will take effect unless the provisions are extended.
The plan also narrows the deduction for state and local taxes (SALT) by capping it at $10,000. It allows taxpayers the option to choose among sales, income, and property taxes. Those who benefit most from the SALT deductions are taxpayers in high-tax states like New York, New Jersey, and California.
In addition, the bill allows the deduction of mortgage interest for newly purchased homes (first or second home) up to $750,000, which is below the current $1 million cap. It also repeals Obamacare’s individual mandate provision, which requires most Americans to have a basic level of health insurance coverage or else pay a tax penalty.
Emel Akan contributed to this report