Warren Buffett believes the corporate tax reform bill is very bullish for stockholders.
The tax overhaul, which President Donald Trump signed into law last month, lowers the corporate tax rate to 21 percent from 35 percent.
"The tax act is a huge factor in valuation," he said on CNBC's "Squawk Box" on Wednesday. "You had this major change in the silent stock holder in American business who has been content with 35 percent ... and now instead of getting 35 percent interest in the earnings they get a 21 percent and that makes the remaining stock more valuable."
The billionaire chairman and CEO of Berkshire Hathaway also explained the magnitude of the tax cut is not reflected in the stock market yet.
"I think 21 percent was not baked in. That's a huge reduction," he added.
Buffett was interviewed by CNBC in Omaha, Nebraska.