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119-s-2818119th CongressWALLET

Tax Excessive CEO Pay Act of 2025

Sponsored By: Senator Sanders, Bernard [I-VT]

Introduced

Summary

This bill raises the corporate income tax for firms with very high CEO-to-worker pay ratios. It adds a pay-ratio–based penalty to the 21 percent corporate rate that kicks in when a firm's pay ratio exceeds 50-to-1 and applies to tax years beginning after December 31, 2025.

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  • Corporations: Companies with pay ratios above 50-to-1 face an extra corporate tax. The penalty scales from +0.5 percentage points for ratios up to 100-to-1 to +5 percentage points for ratios above 500-to-1.
  • Workers and households: The law is designed to deter excessive CEO pay relative to median worker pay by making large pay gaps more costly for employers. It measures compensation using a five-year annualized average and uses the highest-paid employee if that person is not the CEO.
  • Tax administration and rules: Large private firms with average annual gross receipts of $100 million or more must calculate and report the ratio under Treasury guidance. The Secretary of the Treasury must issue regulations to prevent avoidance tactics such as shifting workers to contractor status.

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Bill Overview

Analyzed Economic Effects

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

Higher corporate tax for high pay ratios

If enacted, this bill would raise a corporation's 21% tax rate when its executive-to-worker pay ratio is over 50 to 1. The rate would increase by set amounts: over 50–100: +0.5 percentage points; over 100–200: +1; over 200–300: +2; over 300–400: +3; over 400–500: +4; over 500: +5. The pay ratio would use the five-year annualized average of the compensation measures in 17 C.F.R. 229.402(u)(1)(iii). If the highest-paid employee is not the CEO, the company would use that highest-paid employee's pay. Private companies that do not file SEC reports must follow Treasury rules only if their average annual gross receipts for the prior three years are at least $100,000,000. The change would apply to taxable years beginning after December 31, 2025, and Treasury would write anti-avoidance rules, including rules to prevent gaming by switching employees to contractors.

Sponsors & CoSponsors

Sponsor

Sanders, Bernard [I-VT]

VT • I

Cosponsors

  • Sen. Warren, Elizabeth [D-MA]

    MA • D

    Sponsored 9/16/2025

  • Sen. Van Hollen, Chris [D-MD]

    MD • D

    Sponsored 9/16/2025

  • Sen. Markey, Edward J. [D-MA]

    MA • D

    Sponsored 9/16/2025

  • Sen. Welch, Peter [D-VT]

    VT • D

    Sponsored 9/16/2025

  • Sen. Merkley, Jeff [D-OR]

    OR • D

    Sponsored 10/3/2025

Roll Call Votes

No roll call votes available for this bill.

View on Congress.gov
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