Promotion and Expansion of Private Employee Ownership Act of 2025
Sponsored By: Representative Kelly (PA)
Introduced
Summary
Expand employee ownership in S corporations by making it easier and cheaper for S corporations to sell stock to employee stock ownership plans (ESOPs). The bill would change tax rules, create a Treasury office and an SBA ESOP program, and add a Labor Department Advocate to support ESOP formation and oversight.
Show full summary
- Workers and participants: More employees could gain ownership stakes through ESOPs and benefit from federal outreach and education. ESOP participants are treated as directly owning their proportionate ESOP stock for eligibility in Small Business Administration loans, preferences, and programs.
- S corporation owners and sellers: The bill would broaden and accelerate tax deferral for sales of employer stock to ESOPs by adjusting SECURE 2.0 timing and repealing the Internal Revenue Code section 1042(h) limitation for post-enactment sales, making ESOP transactions more tax-favored for sellers.
- Federal support and programs: Establishes an S Corporation Employee Ownership Assistance Office at Treasury with a 90-day setup deadline, adds an ESOP-specific program in the Small Business Act, and creates an Advocate for Employee Ownership at the Department of Labor paid at Level V of the Executive Schedule with annual reporting duties.
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Bill Overview
Analyzed Economic Effects
3 provisions identified: 3 benefits, 0 costs, 0 mixed.
Faster ESOP tax deferrals for S-corp sales
If enacted, sellers of S-corporation stock to an ESOP would get broader and faster tax deferral. The bill would remove a current limit in section 1042 for sales made after enactment. It would also start the SECURE 2.0 deferral rule on the date this bill is enacted, not December 31, 2027. This could lower near-term tax bills for owners planning ESOP sales.
Small business access rules for ESOP firms
The bill would set clear rules for ESOP-owned small firms under small business programs. For eligibility, each ESOP participant would count as directly owning their share of the stock. The rule would apply when the business qualified before more than 49% was acquired by the ESOP. It would take effect January 1 of the first calendar year after enactment. This could help ESOP firms keep access to SBA loans and preferences.
New federal help for ESOPs and S corps
The bill would create two help points for ESOPs. Treasury would set up an S Corporation Employee Ownership Assistance Office within 90 days of enactment. Labor would appoint an Advocate for Employee Ownership to do outreach, help with ESOP disputes, and advise on rules. The Advocate would file a public report each year by December 31. Funding would be authorized as needed.
Sponsors & CoSponsors
Sponsor
Kelly (PA)
PA • R
Cosponsors
Panetta
CA • D
Sponsored 4/30/2025
Estes
KS • R
Sponsored 4/30/2025
Schneider
IL • D
Sponsored 4/30/2025
Miller (WV)
WV • R
Sponsored 4/30/2025
Davis (IL)
IL • D
Sponsored 4/30/2025
Moore (UT)
UT • R
Sponsored 4/30/2025
Sewell
AL • D
Sponsored 4/30/2025
Tenney
NY • R
Sponsored 5/1/2025
Davids (KS)
KS • D
Sponsored 5/7/2025
Case
HI • D
Sponsored 5/13/2025
Fitzpatrick
PA • R
Sponsored 5/19/2025
Kim
CA • R
Sponsored 6/4/2025
Rouzer
NC • R
Sponsored 6/5/2025
Smucker
PA • R
Sponsored 6/9/2025
Nunn (IA)
IA • R
Sponsored 6/24/2025
Craig
MN • D
Sponsored 7/14/2025
Downing
MT • R
Sponsored 7/14/2025
Owens
UT • R
Sponsored 7/15/2025
Smith (NE)
NE • R
Sponsored 7/15/2025
Evans (PA)
PA • D
Sponsored 7/22/2025
Brownley
CA • D
Sponsored 7/22/2025
Salinas
OR • D
Sponsored 8/19/2025
Baumgartner
WA • R
Sponsored 9/3/2025
Yakym
IN • R
Sponsored 9/8/2025
Thompson (PA)
PA • R
Sponsored 9/15/2025
Bonamici
OR • D
Sponsored 9/15/2025
Moore (AL)
AL • R
Sponsored 9/17/2025
Suozzi
NY • D
Sponsored 10/3/2025
Steube
FL • R
Sponsored 10/3/2025
Franklin, Scott
FL • R
Sponsored 10/3/2025
Sanchez
CA • D
Sponsored 10/10/2025
Grothman
WI • R
Sponsored 10/10/2025
Vindman
VA • D
Sponsored 10/24/2025
Moran
TX • R
Sponsored 10/24/2025
Graves
MO • R
Sponsored 11/10/2025
Langworthy
NY • R
Sponsored 12/1/2025
Bacon
NE • R
Sponsored 12/10/2025
Mrvan
IN • D
Sponsored 12/10/2025
Boyle (PA)
PA • D
Sponsored 1/7/2026
Veasey
TX • D
Sponsored 2/3/2026
Kelly (IL)
IL • D
Sponsored 2/3/2026
Cleaver
MO • D
Sponsored 2/3/2026
Shreve
IN • R
Sponsored 2/4/2026
Lee (NV)
NV • D
Sponsored 2/11/2026
Aderholt
AL • R
Sponsored 2/20/2026
Landsman
OH • D
Sponsored 2/20/2026
LaHood
IL • R
Sponsored 3/16/2026
Roll Call Votes
No roll call votes available for this bill.
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