S2461119th CongressWALLET

Promotion and Expansion of Private Employee Ownership Act of 2025

Sponsored By: Senator Steve Daines

Introduced

Summary

Expands employee ownership by making certain S‑corporation ESOP stock sales fully tax‑deferrable and by creating federal offices to grow and support ESOPs. This bill would remove an existing timing limit on that tax deferral and build a government support system to help companies and workers form ESOPs.

Show full summary
  • S‑corporation owners and sellers would be able to defer tax on qualifying sales of employer stock to employee stock ownership plans (ESOPs) prospectively, removing the prior December 31, 2027 deadline and repealing a Section 1042(h) constraint for sales after enactment.
  • Workers and ESOP companies would get clearer access to small business supports because the Small Business Act would treat ESOP participants as directly owning their proportional share for SBA loans, preferences, and programs, effective January 1 of the year after enactment.
  • Federal support would expand: the Treasury must create an S Corporation Employee Ownership Assistance Office within 90 days to provide outreach and technical help, and the Department of Labor would add an Advocate for Employee Ownership to coordinate outreach, help resolve ESOP disputes, and publish an annual public report.

Bill Overview

Analyzed Economic Effects

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

Tax breaks for S corporation sellers

If enacted, owners who sell S corporation stock to employee stock ownership plans (ESOPs) would be able to use an existing capital‑gains tax deferral starting on the date this Act is enacted. The bill would also remove a legal limit that narrowed that deferral, for sales after enactment. Together these changes would expand and accelerate the tax deferral available to sellers in qualifying ESOP transactions.

ESOP participants keep SBA eligibility

If enacted, starting January 1 of the first calendar year after this Act is enacted, people who hold stock through an ESOP would be treated as directly owning their proportional share of stock for Small Business Act programs. That treatment would help businesses that become majority‑owned by an ESOP keep eligibility for SBA loans, preferences, and similar programs. This change mainly affects small companies that convert ownership to employee stock plans and their worker‑owners.

New federal offices for employee ownership

If enacted, the Treasury would set up an S Corporation Employee Ownership Assistance Office within 90 days to provide education and technical help to S corporations about ESOPs. The Department of Labor would create an Advocate for Employee Ownership to give outreach, assist with disputes, advise on regulations, and report to Congress each year. Congress would be asked to provide funds the Advocate needs to do this work.

Sponsors & CoSponsors

Sponsor

Steve Daines

MT • R

Cosponsors

  • Maggie Hassan

    NH • D

    Sponsored 7/24/2025

  • Marsha Blackburn

    TN • R

    Sponsored 7/24/2025

  • Tina Smith

    MN • D

    Sponsored 7/24/2025

  • Chuck Grassley

    IA • R

    Sponsored 7/24/2025

  • Chris Van Hollen

    MD • D

    Sponsored 7/24/2025

  • Thomas Tillis

    NC • R

    Sponsored 7/24/2025

  • Bernie Sanders

    VT • I

    Sponsored 7/24/2025

  • Todd Young

    IN • R

    Sponsored 7/24/2025

  • Peter Welch

    VT • D

    Sponsored 7/24/2025

  • James Risch

    ID • R

    Sponsored 7/24/2025

  • Mazie Hirono

    HI • D

    Sponsored 7/24/2025

  • Maria Cantwell

    WA • D

    Sponsored 7/24/2025

  • Jon Husted

    OH • R

    Sponsored 7/24/2025

  • Mike Crapo

    ID • R

    Sponsored 7/28/2025

  • Angus King

    ME • I

    Sponsored 7/28/2025

  • Pete Ricketts

    NE • R

    Sponsored 7/28/2025

  • John Fetterman

    PA • D

    Sponsored 7/28/2025

  • Eric Schmitt

    MO • R

    Sponsored 7/30/2025

  • Catherine Cortez Masto

    NV • D

    Sponsored 7/30/2025

  • Tim Sheehy

    MT • R

    Sponsored 9/9/2025

  • Christopher Coons

    DE • D

    Sponsored 9/9/2025

  • John Kennedy

    LA • R

    Sponsored 9/30/2025

  • Amy Klobuchar

    MN • D

    Sponsored 9/30/2025

  • Deb Fischer

    NE • R

    Sponsored 1/15/2026

  • John Reed

    RI • D

    Sponsored 1/15/2026

  • John Barrasso

    WY • R

    Sponsored 2/9/2026

  • Cory Booker

    NJ • D

    Sponsored 2/9/2026

Roll Call Votes

No roll call votes available for this bill.

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