What does Preamble of Employee Profit-Sharing Encouragement Act of 2025 do?

This bill aims to amend the Internal Revenue Code of 1986 The amendment denies deduction for executive compensation under certain conditions Employers must maintain profit-sharing distributions for employees to claim the deduction

What does SHORT TITLE. of Employee Profit-Sharing Encouragement Act of 2025 do?

This bill is formally titled the Employee Profit-Sharing Encouragement Act of 2025.

What does DENIAL OF DEDUCTION FOR EXECUTIVE COMPENSATION UNLESS EMPLOYER of Employee Profit-Sharing Encouragement Act of 2025 do?

This section amends Section 162 of the Internal Revenue Code of 1986 to disallow deductions for executive compensation paid by specified employers unless qualified profit-sharing distributions are made. Qualified profit-sharing distributions require a written plan where employees with at least one year of service receive distributions based on a measure of the employer's receipts, profit, revenues, or earnings. The aggregate distributions must be at least 5 percent of the employer's net income to be considered qualified. The plan must also satisfy nondiscrimination requirements similar to those in section 401(k)(3)(A)(ii). An exception exists if making profit-sharing distributions would jeopardize the employer's ability to continue as a going concern. A 'specified employer' is defined as one meeting the gross receipts test of section 448(c). The rules apply to taxable years beginning after the date of enactment of this Act.

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Employee Profit-Sharing Encouragement Act of 2025

Last updated: 12/3/2025 · Introduced: 12/3/2025

Author: Bonnie Watson Coleman (D-NJ)

TL;DR (AI)

This bill amends the Internal Revenue Code to deny tax deductions for executive compensation at companies exceeding a certain gross receipts threshold unless the company makes qualified profit-sharing distributions to employees.
Qualified profit-sharing distributions require a written plan providing distributions to employees with at least one year of service, based on the employer's financial performance, and meeting nondiscrimination standards.
The bill allows an exception to the profit-sharing requirement if making such distributions would threaten the employer's financial stability.

119th Congressin committeeOfficial page

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Includes provisions on preamble, short title., and 1 more.

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