People tend to avoid exerting cognitive effort, and findings from recent behavioral studies suggest that effort allocation is in part determined by the opportunity cost of slothful responding—operationalized as the average reward rate per unit time. When the average rate of reward is high, individuals make more errors in cognitive control tasks, presumably owing to a withdrawal of costly cognitive processing. An open question remains whether the presumed modulations of cognitively effortful control processes are observable at the neural level. Here, we measured EEG while participants completed the Simon task, a well-known response conflict task, while the experienced average reward rate fluctuated across trials. We examined neural activity associated with the opportunity cost of time by applying generalized eigendecomposition, a hypothesis-driven source separation technique, to identify a midfrontal component associated with the average reward rate. Fluctuations in average reward rate modulated not only component amplitude but also, most importantly, component theta power (4–8 Hz). Higher average reward rate was associated with reduced theta power, suggesting that the opportunity of time modulates effort allocation. These neural results provide evidence for the idea that people strategically modulate the amount of cognitive effort they exert based on the opportunity cost of time.