Stop Subsidizing Multimillion Dollar Corporate Bonuses Act
Sponsor
John Reed
Democrat · RI
Latest Action · May 1, 2025
Read twice and referred to the Committee on Finance. (Sponsor introductory remarks on measure: CR S2738-2739: 3)
Bill Progress
Bill Plans to Cut Big CEO Bonus Tax Breaks
Why it matters
Corporate tax rules may soon stop rewarding massive executive paydays.
The big picture: The Stop Subsidizing Multimillion Dollar Corporate Bonuses Act would close tax loopholes that let companies deduct sky-high executive pay as a business expense. That means businesses would no longer get a tax break for giving huge payouts to their top brass.
Zoom in: The bill broadens the definition of who counts as a 'covered individual,' making far more employees (not just the CEO or top officers) subject to this deduction denial. Previously, companies could structure pay to avoid these limits, but the bill directly targets these workarounds.
Between the lines: Advocates say this change will make the tax code fairer and reduce income inequality by discouraging excessive pay at the very top. Critics, however, argue it could hurt businesses' recruiting power and may push pay even more into stock or non-taxable forms.
What This Bill Does
Blocks Tax Deductions for Huge Corporate Bonuses
Firms can't write off massive compensation for top earners as a business expense, making big bonuses costlier for companies.
Expands Who Counts as a 'Covered Individual'
Changes the law so that more highly paid workers, not just CEOs, lose the bonus deduction loophole.
Updates Language for Tax Code Clarity
Switches out terms like 'employee' for 'individual' so companies can't skirt the rules by creative job titles.
Applies New Rules Retroactively
Includes prior years’ top execs under the new limitations, expanding its reach for tax planning.
Targets Both Direct and Indirect Service Providers
Covers anyone providing services to the company, so outside consultants can't dodge the rules.
Who Benefits
Everyday Taxpayers
Stops their tax dollars from supporting giant executive payouts.
Small Businesses
Levels the playing field so they aren't competing with companies boosted by big tax write-offs.
Rank-and-File Workers
Could shift company focus toward fairer compensation for non-executive employees.
Who's Affected
Large Corporations
Lose a major tax break for high-earning executives, making huge bonuses more expensive.
Corporate Executives and Top Employees
May see more pushback on big pay packages as their bonuses become less tax-friendly.
Tax Accountants and Corporate Lawyers
Face new rules for compliance and likely need revised compensation strategies for clients.
Company Shareholders
Could see changes in profit margins if executive pay packages are scaled down.
Cosponsors (8)
Recent Actions
Read twice and referred to the Committee on Finance. (Sponsor introductory remarks on measure: CR S2738-2739: 3)
Introduced in Senate
What Changes in the Law
4 changes
Sections Amended
Section 162(m) of such Code
read as follows: ``(3) Covered individual
Section 162(m) of Internal Revenue Code of 1986
striking ``Employee''
Section 15(d) of such Act (15 U.S.C. 78o(d)) at any time during the 3-taxable year period ending with such taxable year.''. (c) Regulatory Authority.-- (1) In general.--Section 162(m) of the Internal Revenue Code of 1986
adding at the end the following new paragraph: ``(7) Regulations
Section 162(m) of such Code
striking subparagraph (H)
Committees (1)
Contact Your Representatives
Find your legislators and make your voice heard on Stop Subsidizing Multimillion Dollar Corporate Bonuses Act.
Find Your LegislatorsFor Advocacy Organizations
Launch grassroots campaigns that mobilize supporters and move legislators to action.
Get a DemoFull Bill Text
Open in New TabSource: Congress.gov
