Tax Changes for S Corporations and Small Business Owners
A senate committee must act next: committee consideration.
While small business bills often get support, this bill includes major tax code changes and repeals a significant section of the tax law that might face pushback.
Scores run from -100 (strongly harmful) to +100 (strongly beneficial) for each group, combining impact, certainty, scope, and duration ratings of 1-5. How impact scoring works
Some self-employed and gig workers elect S corporation status to manage self-employment taxes. Easier shareholder rules and a higher passive income threshold could make this structure more forgiving for small solo operations, though the direct effect on most gig workers is limited.
Read twice and referred to the Committee on Finance.
Sent to a congressional committee for expert review. The committee decides whether this bill moves forward.
Introduced in Senate
The bill was officially filed and given a number. It now enters the legislative queue.
Senators John Thune and Ben Cardin introduced the S Corporation Modernization Act of 2025, a bipartisan effort to update tax rules for small businesses. The bill proposes increasing the shareholder limit and allowing non-resident aliens and IRAs to hold shares in S corporations for the first time.
The S Corporation Modernization Act of 2025 would permit individual retirement accounts (IRAs) to be shareholders in S corporations. It also includes a provision to allow non-resident aliens to own shares through Electing Small Business Trusts, expanding the capital pool for U.S. small businesses.
The S Corporation Modernization Act of 2025, introduced Tuesday, targets the restrictive 100-shareholder limit. By treating all employees as one owner, the bill aims to simplify the path for small businesses to offer equity to their workforce while maintaining their pass-through tax status.
No votes recorded for this bill yet.
Document Type
Congressional Bill
Official Title
S Corporation Modernization Act of 2025
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