Tax Excessive CEO Pay Act of 2025

This bill would raise corporate taxes on companies with very large gaps between what their top-paid executive makes and what the typical worker makes. If a company’s pay ratio is more than 50 to 1, its tax rate would go above the standard 21%, with the extra amount tied to how high that ratio is under a set table .

The pay ratio follows the existing federal method, but it must be averaged over five years. If someone other than the CEO is the highest-paid worker, that person’s pay is used. Big private companies that aren’t already under SEC rules must also calculate and report this ratio if their average yearly receipts are at least $100 million; smaller companies under that amount are not subject to the increase. The change would start with tax years beginning after December 31, 2025, and the Treasury must issue rules to stop workarounds, like shifting jobs to contractors to game the ratio.

Key points

• Who is affected: Corporations with a CEO-to-median worker pay ratio over 50:1; large private companies (average receipts ≥ $100M) must compute/report the ratio; smaller companies are not affected by the increase.
• What changes: Their corporate tax rate rises above 21%, with the increase based on the pay gap size, as shown in a table; the ratio uses a 5-year average and can use the highest-paid employee if not the CEO .
• When: Applies to tax years starting after December 31, 2025; anti-avoidance rules will be issued by the Treasury.