HR3105-119

What This Bill Does

The Promotion and Expansion of Private Employee Ownership Act of 2025 aims to encourage more companies to adopt Employee Stock Ownership Plans (ESOPs), particularly for S corporations. It extends tax benefits for ESOP stock sales, ensures ESOP-owned businesses remain eligible for Small Business Administration programs, and creates new federal offices dedicated to promoting and supporting employee ownership.

Who Benefits and How

S corporation owners selling stock to ESOPs benefit from extended tax deferral provisions that reduce their immediate tax burden. Employees of ESOP companies gain improved access to ownership stakes and retirement savings through their workplace. Small businesses with ESOPs retain eligibility for SBA loans, contracts, and other programs even when employees own more than 49 percent of the company, removing a previous barrier that discouraged employee ownership transitions.

Who Bears the Burden and How

The Treasury Department and Department of Labor must establish and staff new offices dedicated to employee ownership, including the S Corporation Employee Ownership Assistance Office and an Advocate for Employee Ownership position. Taxpayers bear the cost of these new federal offices and the revenue lost from extended tax deferrals on ESOP stock sales.

Key Provisions

• Extends tax deferral for sales of employer stock to S corporation ESOPs beyond the current December 31, 2027 deadline
• Amends the Small Business Act to ensure companies remain eligible for SBA programs after becoming majority ESOP-owned
• Requires the Treasury Department to establish an S Corporation Employee Ownership Assistance Office within 90 days
• Creates an Advocate for Employee Ownership position within the Department of Labor to promote employee ownership and assist with disputes
• Provides technical assistance to employers and employees considering or implementing ESOP structures