To amend the Internal Revenue Code of 1986 to expand the denial of deduction for certain excessive employee remuneration, and for other purposes.
Sponsors
Legislative Progress
IntroducedMr. Doggett (for himself, Mr. Casar, Ms. Chu, Mr. Cohen, …
Summary
What This Bill Does
This bill closes loopholes in existing tax law that limits how much corporations can deduct for executive compensation. Currently, companies cannot deduct executive pay over $1 million for certain top officers, but the law has gaps. This bill expands who is covered and prevents companies from avoiding the rules by paying executives through contractors or pass-through entities.
Who Benefits and How
Federal taxpayers benefit because corporations will pay more in taxes when they cannot deduct excessive executive pay. The bill essentially stops taxpayers from subsidizing multimillion-dollar bonuses through the tax code.
Lower-paid workers may indirectly benefit if companies redirect compensation toward broader employee pay rather than concentrated executive bonuses, though this is not guaranteed.
Who Bears the Burden and How
Large publicly-traded corporations face higher tax bills because they can no longer deduct compensation over $1 million for a broader range of highly-paid individuals. This includes not just traditional employees but also contractors and consultants who perform services for the company.
Highly-compensated executives, contractors, and consultants may see pressure on their compensation packages as companies adjust to the increased tax cost of paying above $1 million.
Key Provisions
- Expands the $1 million deduction limit from "covered employees" to "covered individuals," capturing executives paid through non-employee arrangements
- Includes anyone who "performs services (directly or indirectly)" for the company, closing the independent contractor loophole
- Gives the Treasury Secretary authority to issue regulations preventing avoidance through pass-through entities
- Applies to taxable years beginning after December 31, 2024
- Expands which companies are covered to include those that filed SEC reports within the past 3 years
Evidence Chain:
This summary is derived from the structured analysis below. See "Detailed Analysis" for per-title beneficiaries/burden bearers with clause-level evidence links.
Primary Purpose
This bill aims to amend the Internal Revenue Code of 1986 by expanding the denial of deductions for certain excessive employee remuneration, particularly targeting multimillion-dollar corporate bonuses.
Policy Domains
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
Key Definitions
Terms defined in this bill
Remuneration that is subject to the denial of deduction under Section 162(m) of the Internal Revenue Code.
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology