Sponsors (7)
The bill shifts incentives away from stock buybacks toward retained earnings and reduced tax preferences for certain stock‑based pay—potentially boosting long‑term investment and fairness—but raises costs for repurchasing firms, may prompt avoidance and compliance burdens, and creates transitional fairness issues.
Shareholders of non-repurchasing companies, workers, and the broader economy may see companies retain more earnings for capital investment or dividends instead of stock buybacks, reducing upward pressure on buybacks and potentially supporting longer‑term business growth and jobs.
Taxpayers and recipients of high-compensation stock grants: the bill denies a proration reduction for stock issued to covered or highly‑paid non‑employees, reducing a tax preference that can favor executive or contractor stock-based pay.
Investors, retirement account holders, and ordinary shareholders in firms that repurchase stock may face higher corporate costs that could translate into lower share prices or reduced dividends.
Public companies, accountants, and compensation recipients may face incentives to restructure pay or financial arrangements to avoid the rule, increasing complexity, compliance costs, and potential tax‑planning avoidance.
Employees and contractors paid around the effective-date cutoff could be treated unevenly because the carve‑out only applies after taxable years ending more than 90 days after enactment, creating transitional uncertainty and fairness concerns.
Based on analysis of 2 sections of legislative text.
Increases the excise tax on corporate stock repurchases from 1% to 4% and narrows a proration reduction for stock issued to certain executives and highly paid non‑employees.
Increases the federal excise tax on corporate stock repurchases from 1% to 4% for repurchases after the law takes effect, and adjusts timing/proration rules for taxable years that include the enactment date. It narrows an existing proration reduction so that stock issued or provided to senior executives and certain non-employee high‑paid recipients is not counted toward the reduction for stock issued during the taxable year for most post‑enactment taxable years. The change raises the effective tax on buybacks, alters how corporations prorate the tax in transition years, and creates a new exception that treats stock issued to covered employees and very highly compensated non‑employees differently for the reduction calculation. The exception only applies to stock issued in taxable years ending more than 90 days after enactment.
Official title: Amend the Internal Revenue Code of 1986 to increase the rate of the excise tax on the repurchase of corporate stock, and for other purposes.
Introduced June 16, 2026 by Charles Ellis Schumer · Last progress June 16, 2026