Sponsors (10)
The bill makes retirement startup and auto‑enrollment incentives usable for tax‑exempt and small employers—likely increasing employer-sponsored retirement coverage—while protecting Social Security trust funds via appropriations, at the cost of higher general‑fund spending, limited benefit for very small employers, and added administrative complexity.
Tax-exempt employers (e.g., 501(c) nonprofits) and small employers can use small‑employer retirement credits as refundable employer payroll tax credits, lowering their payroll tax liability and making it easier for them to afford starting retirement plans.
Organizations that previously could not use income‑tax credits (including many tax‑exempt employers) can now utilize startup and automatic‑enrollment retirement incentives, increasing the likelihood that more employers will offer retirement plans.
The bill appropriates amounts equal to the revenue reductions to OASI and DI, avoiding a direct drawdown of Social Security trust funds and preserving trust‑fund balances.
Very small or newly formed tax‑exempt employers may receive a smaller benefit because the refundable credit is limited to the amount of employer payroll tax they actually pay.
Appropriating amounts to restore Social Security trust‑fund receipts shifts the cost to the federal government’s general fund, potentially increasing general‑fund outlays or moving budgetary pressure onto other priorities and taxpayers.
Creating a new refundable payroll credit with quarterly repayment and annual/quarterly limits adds administrative complexity and compliance burden for employers and increases IRS/Treasury administration work.
Based on analysis of 2 sections of legislative text.
Allows tax-exempt employers to use the small-employer start-up and automatic-enrollment retirement credits as payroll-tax credits, limited by payroll tax paid.
Introduced July 21, 2025 by Vernon G. Buchanan · Last progress July 21, 2025
Makes two small-employer retirement tax credits available to tax-exempt employers by allowing those credits to be used against the employer share of payroll (FICA) tax. The refundable/usable amount is capped at the employer payroll tax actually paid in the year, and the change is effective for taxable years beginning after December 31, 2024. The bill also directs transfers from the general fund to reimburse the Social Security OASI and DI Trust Funds for any revenue losses caused by this change.