To amend the Internal Revenue Code of 1986 to deny deduction for outsourcing payments.
New Bill Targets Tax Breaks for Companies That Outsource Services to Foreign Workers
Legislative Progress
Key Points
- This bill would stop companies from subtracting the cost of foreign labor from their taxes if that labor is used to serve customers in the United States.
- Under current law, businesses can often lower their tax bills by deducting the money they spend on services, even if those services are performed by workers in other countries.
- The proposal defines 'outsourcing payments' as fees or service charges paid to foreign individuals or companies for work that benefits people living in the U.S.
- If a company uses foreign services for both U.S. and international customers, the bill would only block the tax deduction for the portion of the work that goes to Americans.
- The change is intended to make it more expensive for companies to move service jobs overseas, potentially encouraging them to hire more workers within the United States.
- If this becomes law, the new rules would apply to all payments made after December 31, 2025.
Impact Analysis
Personal Impact
Small businesses that use foreign contractors or outsourced services to keep costs down — like overseas call centers, IT support, or customer service — would lose the ability to deduct those expenses from their taxes. This could significantly increase their effective tax burden and force them to either absorb higher costs or bring those services back to domestic providers at potentially higher prices.
State Impacts
Milestones
Referred to the House Committee on Ways and Means.
Introduced in House
The bill was officially filed and given a number. It now enters the legislative queue.
Votes
No votes have been recorded for this legislation yet.
News
No related news coverage found for this legislation yet.
Source Information
Document Type
Congressional Bill
Official Title
To amend the Internal Revenue Code of 1986 to deny deduction for outsourcing payments.
Data Sources
Sponsor
Analysis generated by AI. Always verify with official sources.