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119-s-1576119th CongressWALLET

Stop Subsidizing Multimillion Dollar Corporate Bonuses Act

Sponsored By: Senator Reed, Jack [D-RI]

Introduced

Summary

Broadens the rule that denies corporate tax deductions for excessive executive pay. The bill would widen who counts as a covered person and what pay can be treated as non‑deductible, targeting more high-paid individuals tied to publicly held companies and giving the Treasury new rulemaking authority.

Show full summary
  • Publicly held corporations: Employers that meet the bill's new filing test could lose deductions for a wider set of compensation, changing which firms are covered by using a 3-taxable-year filing test and applying to tax years beginning in 2025.
  • High-paid individuals and service providers: "Covered individual" would reach more people who perform services for the company and certain past top officers who were among the 3 highest compensated, so more pay could be denied as a corporate deduction.
  • Tax administration: The Secretary could issue guidance and rules on reporting and on steps to prevent avoidance, including measures aimed at pay routed through pass-throughs or related entities.

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Bill Overview

Analyzed Economic Effects

4 provisions identified: 0 benefits, 3 costs, 1 mixed.

Tighter limits on corporate pay deductions

This bill would broaden which pay a public company cannot deduct. It would replace terms like “employee” with “individual” and expand who counts as a covered individual. Covered individuals would include anyone performing services for the company for tax years starting after December 31, 2024. It would also include certain CEOs and CFOs who served in taxable years beginning after December 31, 2016 and before January 1, 2025 if they were among the three highest‑paid officers. If enacted, affected companies could report higher taxable income and some high‑paid workers could face higher effective taxes.

New test for public companies

This bill would change which firms count as publicly held for the executive‑pay deduction rules. The test would look at whether the firm was required to file reports under section 15(d) at any time during the three taxable years ending with the applicable year. It would apply for tax years starting after December 31, 2024. If enacted, some companies could newly fall under the deduction limit and face more tax exposure.

Treasury rulemaking for executive pay

This bill would let the Treasury issue rules and guidance to carry out the deduction limits. The authority includes rules on reporting and steps to stop avoidance through pass‑throughs or other entities. It would apply for tax years starting after December 31, 2024. If enacted, some firms could face more reporting requirements and higher compliance costs.

Minor technical change to deduction rule

This bill would strike a technical subparagraph from the executive‑pay deduction rule as a conforming edit. The change is textual and would apply for tax years starting after December 31, 2024. If enacted, the direct effects would likely be small and mostly technical.

Sponsors & CoSponsors

Sponsor

Reed, Jack [D-RI]

RI • D

Cosponsors

  • Sen. Blumenthal, Richard [D-CT]

    CT • D

    Sponsored 5/1/2025

  • Sen. Baldwin, Tammy [D-WI]

    WI • D

    Sponsored 5/1/2025

  • Sen. Warren, Elizabeth [D-MA]

    MA • D

    Sponsored 5/1/2025

  • Sen. Merkley, Jeff [D-OR]

    OR • D

    Sponsored 5/1/2025

  • Sen. Van Hollen, Chris [D-MD]

    MD • D

    Sponsored 5/1/2025

  • Sen. Sanders, Bernard [I-VT]

    VT • I

    Sponsored 5/1/2025

  • Sen. Whitehouse, Sheldon [D-RI]

    RI • D

    Sponsored 5/1/2025

  • Sen. Alsobrooks, Angela D. [D-MD]

    MD • D

    Sponsored 12/2/2025

Roll Call Votes

No roll call votes available for this bill.

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