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
Rep. Panetta, Jimmy [D-CA-19]
CA • D
Sponsored 4/30/2025
Estes
KS • R
Sponsored 4/30/2025
Rep. Schneider, Bradley Scott [D-IL-10]
IL • D
Sponsored 4/30/2025
Rep. Miller, Carol D. [R-WV-1]
WV • R
Sponsored 4/30/2025
Davis (IL)
IL • D
Sponsored 4/30/2025
Rep. Moore, Blake D. [R-UT-1]
UT • R
Sponsored 4/30/2025
Sewell
AL • D
Sponsored 4/30/2025
Rep. Tenney, Claudia [R-NY-24]
NY • R
Sponsored 5/1/2025
Rep. Davids, Sharice [D-KS-3]
KS • D
Sponsored 5/7/2025
Rep. Case, Ed [D-HI-1]
HI • D
Sponsored 5/13/2025
Rep. Fitzpatrick, Brian K. [R-PA-1]
PA • R
Sponsored 5/19/2025
Rep. Kim, Young [R-CA-40]
CA • R
Sponsored 6/4/2025
Rep. Rouzer, David [R-NC-7]
NC • R
Sponsored 6/5/2025
Rep. Smucker, Lloyd [R-PA-11]
PA • R
Sponsored 6/9/2025
Rep. Nunn, Zachary [R-IA-3]
IA • R
Sponsored 6/24/2025
Craig
MN • D
Sponsored 7/14/2025
Rep. Downing, Troy [R-MT-2]
MT • R
Sponsored 7/14/2025
Rep. Owens, Burgess [R-UT-4]
UT • R
Sponsored 7/15/2025
Rep. Smith, Adrian [R-NE-3]
NE • R
Sponsored 7/15/2025
Rep. Evans, Dwight [D-PA-3]
PA • D
Sponsored 7/22/2025
Rep. Brownley, Julia [D-CA-26]
CA • D
Sponsored 7/22/2025
Rep. Salinas, Andrea [D-OR-6]
OR • D
Sponsored 8/19/2025
Rep. Baumgartner, Michael [R-WA-5]
WA • R
Sponsored 9/3/2025
Rep. Yakym, Rudy [R-IN-2]
IN • R
Sponsored 9/8/2025
Rep. Thompson, Glenn [R-PA-15]
PA • R
Sponsored 9/15/2025
Bonamici
OR • D
Sponsored 9/15/2025
Rep. Moore, Barry [R-AL-1]
AL • R
Sponsored 9/17/2025
Rep. Suozzi, Thomas R. [D-NY-3]
NY • D
Sponsored 10/3/2025
Rep. Steube, W. Gregory [R-FL-17]
FL • R
Sponsored 10/3/2025
Franklin, Scott
FL • R
Sponsored 10/3/2025
Rep. Sánchez, Linda T. [D-CA-38]
CA • D
Sponsored 10/10/2025
Rep. Grothman, Glenn [R-WI-6]
WI • R
Sponsored 10/10/2025
Rep. Vindman, Eugene Simon [D-VA-7]
VA • D
Sponsored 10/24/2025
Rep. Moran, Nathaniel [R-TX-1]
TX • R
Sponsored 10/24/2025
Rep. Graves, Sam [R-MO-6]
MO • R
Sponsored 11/10/2025
Langworthy
NY • R
Sponsored 12/1/2025
Rep. Bacon, Don [R-NE-2]
NE • R
Sponsored 12/10/2025
Mrvan
IN • D
Sponsored 12/10/2025
Rep. Boyle, Brendan F. [D-PA-2]
PA • D
Sponsored 1/7/2026
Rep. Veasey, Marc A. [D-TX-33]
TX • D
Sponsored 2/3/2026
Rep. Kelly, Robin L. [D-IL-2]
IL • D
Sponsored 2/3/2026
Rep. Cleaver, Emanuel [D-MO-5]
MO • D
Sponsored 2/3/2026
Rep. Lee, Susie [D-NV-3]
NV • D
Sponsored 2/11/2026
Aderholt
AL • R
Sponsored 2/20/2026
Rep. Shreve, Jefferson [R-IN-6]
IN • R
Sponsored 2/4/2026
Rep. Landsman, Greg [D-OH-1]
OH • D
Sponsored 2/20/2026
LaHood
IL • R
Sponsored 3/16/2026
Johnson (SD)
SD • R
Sponsored 3/25/2026
Kustoff
TN • R
Sponsored 4/15/2026
Rep. Strong, Dale W. [R-AL-5]
AL • R
Sponsored 5/4/2026
Schakowsky
IL • D
Sponsored 5/7/2026
Khanna
CA • D
Sponsored 5/12/2026
Rep. Alford, Mark [R-MO-4]
MO • R
Sponsored 5/12/2026
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov