With the recent passage of the Tax Cuts and Jobs Act of 2017, the United States no longer has the highest top corporate tax rate among the world’s advanced economies.

Seeking to boost the U.S. economy while stemming the tide of corporations fleeing the U.S. tax system, the Tax Cuts and Jobs Act:

• Cuts the corporate tax rate from a maximum of 35% to a flat rate of 21%
• Eliminates the corporate alternative minimum tax.
• Eliminates the taxation of profits of overseas subsidiaries
• Includes a reduced one-time repatriation tax on accumulated untaxed foreign profits.

These changes will come at a cost. The Congressional Budget Office estimates the Act is expected to add $1.5 trillion plus additional servicing costs to the federal deficit over the next decade.

Initial corporate reaction has been positive, with companies such as AT&T, Comcast, Boeing, Wells Fargo, Western Alliance Bancorp, and Fifth Third Bancorp announcing one-time bonuses, wage hikes, and charitable gifts.

In addition to wage hikes and gifts, it is likely that a large portion of the future tax savings and repatriated funds will go toward capital expenditures, mergers and acquisitions, dividends, share buybacks, and debt reduction.

It is also likely that the trend toward a more level corporate taxation playing field will continue worldwide, as other high-tax countries such as Belgium and France have already begun the process of phasing in reduced corporate tax rates over the coming years, and there is increased speculation that other high-tax countries such as Australia, Germany, and Japan may eventually follow suit.

While the Tax Cuts and Jobs Act is broadly expected to benefit U.S. companies and their investors, it’s also possible that the fiscal stimulus it provides may embolden the Fed to hike interest rates more aggressively in an effort to cool the economy. Until that happens, however, U.S. businesses will likely be celebrating