To amend the Internal Revenue Code of 1986 to impose a corporate tax rate increase on companies whose ratio of compensation of the CEO or other highest paid employee to median worker compensation is more than 50 to 1, and for other purposes.
Sponsors
Legislative Progress
IntroducedMs. Tlaib (for herself, Ms. Pingree, Mr. Huffman, Mrs. Ramirez, …
Summary
What This Bill Does
The Tax Excessive CEO Pay Act of 2025 increases corporate tax rates on companies where the CEO (or highest-paid employee) earns more than 50 times what the median worker earns. The bill aims to reduce income inequality by making extreme executive pay ratios financially costly for corporations.
Who Benefits and How
Median-income workers and society broadly benefit from reduced income inequality pressure, as companies will have a financial incentive to either raise worker pay or moderate executive compensation. The federal government would collect additional tax revenue from corporations with high pay ratios, which could fund public programs or reduce deficits.
Who Bears the Burden and How
Large corporations with high CEO-to-worker pay ratios face increased tax rates. Public companies and private companies with over $100 million in annual gross receipts must calculate and report their pay ratios. Companies with pay ratios above 50:1 will pay a corporate tax surcharge ranging from 0.5 to 5 percentage points above the standard 21% rate, depending on how extreme the ratio is. Shareholders of affected companies may see reduced after-tax profits.
Key Provisions
- Imposes a sliding-scale tax increase on corporations with CEO-to-median-worker pay ratios above 50:1, with penalties ranging from 0.5 percentage points (for ratios 50:1-100:1) up to 5 percentage points (for ratios above 500:1)
- Uses a 5-year rolling average of compensation to calculate the pay ratio, preventing companies from manipulating single-year figures
- Exempts private companies with less than $100 million in average annual gross receipts from the requirement
- Directs the Treasury Secretary to issue anti-avoidance regulations, specifically targeting workforce composition manipulation (such as reclassifying employees as contractors)
- Applies to taxable years beginning after December 31, 2025
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
The bill aims to impose a corporate tax rate increase on companies where the ratio of CEO or highest-paid employee compensation to median worker pay exceeds 50:1.
Policy Domains
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "the_secretary"
- → Secretary of the Treasury (or delegate)
- "the_administrator"
- → None
Key Definitions
Terms defined in this bill
Amends the Internal Revenue Code to increase corporate tax rates based on a compensation ratio of CEO or highest-paid employee pay relative to median worker compensation.
The Tax Excessive CEO Pay Act of 2025
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