Sponsors (28)
Introduced July 24, 2025 by Steve Daines · Last progress July 24, 2025
The bill promotes and lowers barriers to employee ownership—potentially expanding retirement savings and succession options for workers and preserving small-business benefits for ESOPs—while raising fiscal costs, creating new administrative burdens, and risking program gaming that could shift benefits toward sellers or larger firms.
Small S-corporation owners who convert to ESOP structures retain small-business status and continued access to SBA loans, set-asides, and other small-business benefits.
Employees (middle-class families and rank-and-file workers) who participate in ESOPs gain qualified retirement accounts, increased wealth-building opportunities, and—on average—greater job stability and succession options.
Owners of private companies gain broader access to section 1042 rollover deferrals when selling to employee ownership structures, enabling deferral of capital gains on sales to ESOPs and similar transfers.
Tax changes and incentives (including repeal of subsection (h) and broader rollover eligibility) could reduce federal revenue or delay tax receipts, increasing fiscal costs for taxpayers and potentially widening the deficit.
Allowing ESOP-owned firms to retain small-business status may let larger or previously ineligible firms access limited SBA set-asides and preferences, undermining the programs' intent and increasing competition for small-business benefits.
Creating a new Treasury S‑corp office, an ESOP Advocate, and updated SBA procedures will raise administrative costs borne by taxpayers and may force trade-offs with other Treasury, DOL, or SBA priorities.
Based on analysis of 6 sections of legislative text.
Removes a tax-code limit, creates Treasury and DOL offices, and counts ESOP participants as direct owners for SBA eligibility to promote S-corporation employee ownership.
Creates federal supports to expand employee ownership in S corporations by removing a recent tax-code limitation, directing federal agencies to help firms form ESOPs, and changing how ESOP ownership counts for small-business programs. It establishes a Treasury office to provide outreach and technical help, creates an Advocate for Employee Ownership at the Department of Labor with reporting duties and pay set at Executive Schedule Level V, and treats ESOP participants as direct owners for SBA small-business eligibility beginning the first January after enactment.