Employee Profit-Sharing Encouragement Act of 2025

Key Points

• This bill would stop certain businesses from writing off top executive pay on their taxes unless they share profits with employees.
• To qualify, the company would need a written plan that gives profit-sharing cash payments to employees (including part-time) who have worked there at least 1 year.
• The profit-sharing would generally need to total at least 5% of the company’s net income for the year, based on the company’s own books and records.
• The plan would also have to be set up so it doesn’t unfairly favor higher-paid workers; it must follow rules meant to treat employees more evenly.
• A company could skip the payouts for a year if it can strongly prove to the IRS that paying them would threaten the business’s survival.