S. 1576

119th CONGRESS 1st Session

To amend the Internal Revenue Code of 1986 to expand the denial of deduction for certain excessive employee remuneration, and for other purposes.

IN THE SENATE OF THE UNITED STATES · May 1, 2025 · Sponsor: Mr. Reed · Committee: Committee on Finance

S. 1576
- SEC. 1. Short title
- SEC. 2. Expansion of denial of deduction for certain excessive employee remuneration

SEC. 1. Short title

This Act may be cited as the Stop Subsidizing Multimillion Dollar Corporate Bonuses Act.

SEC. 2. Expansion of denial of deduction for certain excessive employee remuneration

(a) In general
- (1) Expansion
  - of the Internal Revenue Code of 1986 is amended— Section 162(m)
    - by striking each place it appears in paragraphs (1), (4), and (5)(E) and inserting applicable remuneration,
    - by striking each place it appears in paragraphs (1) and (4) and inserting covered individual, and
    - by striking each place it appears in paragraph (1) and subparagraphs (A), (C)(ii), and (E) of paragraph (4) and inserting individual.
- (2) Covered individual
  - (3) Covered individual
    - For purposes of this subsection, the term covered individual means—
      - any individual who performs services (directly or indirectly) for the taxpayer (or any predecessor) for any taxable year beginning after December 31, 2024, or
      - any employee—
        
        (i) who was the principal executive officer or principal financial officer of the taxpayer (or any predecessor) at any time during any preceding taxable year beginning after December 31, 2016, and before January 1, 2025, or who was an individual acting in such a capacity, or
        
        (ii) the total compensation of whom for any taxable year described in clause (i) was required to be reported to shareholders under the Securities Exchange Act of 1934 by reason of such individual being among the 3 highest compensated officers for the taxable year (other than any individual described in clause (i)).
    - Such term shall include any employee who would be described in subparagraph (B)(ii) if the reporting described in such subparagraph were required as so described.
  - Paragraph (3) of section 162(m) of such Code is amended to read as follows:
- (3) Conforming amendments
  - The heading for of the Internal Revenue Code of 1986 is amended by striking . section 162(m)
  - The heading for section 162(m)(4) is amended by striking .
(b) Modification of definition of publicly held corporation
- of the Internal Revenue Code of 1986 is amended— Section 162(m)(2)
  - by inserting after , and
  - by striking subparagraph (B) and inserting the following:
(c) Regulatory authority
- (1) In general
  - of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: Section 162(m)
    - (7) Regulations
      - The Secretary may prescribe such guidance, rules, or regulations as are necessary to carry out the purposes of this subsection, including regulations—
        
        with respect to reporting, and
        
        to prevent avoidance of the purposes of this section by providing compensation through a pass-through or other entity.
- (2) Conforming amendment
  - Paragraph (6) of section 162(m) of such Code is amended by striking subparagraph (H).
(d) Effective date
- The amendments made by this section shall apply to taxable years beginning after December 31, 2024.

S. 1576

Table of contents

SEC. 1. Short title

SEC. 2. Expansion of denial of deduction for certain excessive employee remuneration