Employee Profit-Sharing Encouragement Act of 2025

This bill would change federal tax law so that certain employers could not deduct pay given to highly compensated individuals unless they make profit-sharing cash payments to employees that same tax year. To count, the payments must follow a written plan based on the employer's receipts, profits, revenues, or earnings. Employees, including part-time workers, employed for at least 1 year must have a right to the payments. Total payments must equal at least 5 percent of the employer's net income and meet nondiscrimination rules. An employer can be excused if it proves to the Treasury Secretary that the payments would threaten its ability to stay in business. The bill applies to employers that meet a gross receipts test in tax law, and it takes effect for tax years beginning after it is enacted.

Full text and official record on Congress.gov

Sponsors

• Bonnie Watson Coleman Democrat sponsor
• 1 cosponsors