Promotion and Expansion of Private Employee Ownership Act of 2025

Summary

Removes a recent tax-code limitation on sales to employee stock ownership plans (ESOPs), makes ESOP participants count as direct owners for Small Business Administration (SBA) eligibility, and creates new federal offices to promote and assist employee ownership. It requires the Treasury to create an S Corporation Employee Ownership Assistance Office, and the Labor Department to appoint an Advocate for Employee Ownership to provide outreach, technical help, dispute assistance, and recommendations to expand ESOPs.

• Repeals a post-SECURE 2.0 tax limitation on sales to ESOPs, applying to sales after enactment.
• Requires Treasury to create an S Corporation Employee Ownership Assistance Office within 90 days to provide education and technical assistance on ESOPs.
• Changes SBA rules so ESOP participants are treated as directly owning proportionate shares for eligibility in SBA loans, preferences, and programs.
• Creates an Advocate for Employee Ownership at the Department of Labor to coordinate outreach, assist with disputes, and advise on ERISA rules affecting ESOPs.
• Advocate reports annually and is paid at Executive Schedule level V; the statute authorizes necessary funds for that compensation.
• SBA eligibility change becomes effective January 1 of the first calendar year after enactment; other operative provisions apply on or soon after enactment.
• Uses cross-references to existing tax and ERISA definitions (e.g., 26 U.S.C. §4975(e)(7)) rather than creating new plan definitions.