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Congress·In Committee·H.R. 7424

House Bill Would Ban Federal Contracts for Companies That Move Overseas to Dodge U.S. Taxes

American Business for American Companies Act of 2026

about 1 month ago·View on Congress.gov
Part of: Congress Targets Inverted Corporations with Contract Bans and Tax Reclassification

Legislative Progress

House
Senate
President
Law

Key Points

  • This bill stops the federal government from giving contracts to 'inverted' corporations. These are companies that move their legal headquarters to a foreign country to pay lower taxes while keeping most of their business operations or ownership in the United States.
  • The rule applies to both civilian and defense contracts. It also prevents large contractors from hiring these overseas-based companies as subcontractors for more than 10% of a project's value if the total contract is worth more than $10 million.
  • A company is considered 'inverted' if it moved abroad after May 2014 and its former U.S. owners still hold more than 50% of the stock, or if its top management and at least 25% of its employees, assets, or income are still tied to the United States.
  • The goal is to ensure that businesses receiving U.S. taxpayer money are fully committed to the American economy and are not using legal loopholes to avoid paying their fair share of U.S. taxes.
  • Government agencies can only bypass this rule if they prove it is necessary for national security or to run public health programs. If they use this waiver, they must explain their decision to Congress within 14 days.
  • Companies that violate these rules could face serious consequences, including having their current contracts canceled or being banned from winning any future government work.
Economy FinanceNational Security Foreign PolicyTaxes

Impact Analysis

Personal Impact

Scores: 1 = low, 5 = highSentiment: -5 to +5 (net benefit)

Milestones

2 milestones2 actions
Feb 9, 2026House

Referred to the Committee on Oversight and Government Reform, and in addition to the Committee on Armed Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

Feb 9, 2026

Introduced in House

Related Bills

1 bill
S. 3811Identical bill

American Business for American Companies Act of 2026

Feb 9 — Read twice and referred to the Committee on Homeland Security and Governmental Affairs. (text: CR S535-537)

Source Information

Document Type

Congressional Bill

Official Title

American Business for American Companies Act of 2026

Bill NumberHR 7424
Congress119th Congress
ChamberHouse of Representatives
Latest ActionReferred to the Committee on Oversight and Government Reform, and in addition to the Committee on Armed Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

Sponsor

Analysis generated by AI. Always verify with official sources.