SHARE Plan Act
- Sponsor
- Rep. Suozzi, Thomas R. [D-NY-3]
- Committees
- Ways and Means Committee (primary)
- Last action
- Jul 23, 2025
Bottom line
The SHARE Plan Act seeks to boost employee ownership through significant corporate tax incentives and individual income tax exclusions, potentially shifting wealth distribution and corporate governance.
What it actually does
This bill amends the Internal Revenue Code to offer a 3-percentage-point reduction in the corporate income tax rate for companies that establish and maintain a 'SHARE plan' for distributing common stock to their employees. It also allows these corporations to deduct the fair market value of the distributed stock and excludes the value of this stock from employees' gross income. The goal is to incentivize broad-based employee ownership.
Proponents argue
Proponents argue that this bill will foster a more inclusive economy by expanding employee ownership, aligning the interests of workers and shareholders, and encouraging long-term corporate performance. They contend that giving employees a direct stake in their company's success can boost productivity, reduce turnover, and create more equitable wealth distribution, while the tax incentives make it financially attractive for companies to adopt such plans.
Opponents contend
Opponents might argue that the significant tax breaks, including a reduced corporate tax rate and a new deduction, could lead to substantial revenue loss for the federal government, disproportionately benefiting large corporations and potentially creating new avenues for tax avoidance. Concerns could also be raised about the complexity of compliance for businesses and the potential for the benefits to be concentrated among higher-earning employees despite the bill's stated intent for broad distribution.
The bill is relatively concise, allowing an informed reader to grasp its core mechanisms within the typical timeframe for legislative review.
Section 2(a), new Section 12(a)
Reduced Corporate Tax Rate for SHARE Corporations
This provision establishes a 3-percentage-point reduction in the corporate income tax rate for 'SHARE corporations.' This means a qualifying corporation would pay a lower federal income tax rate than other corporations. However, there is a cumulative cap: the total tax reductions received over time cannot exceed the aggregate market value of the stock distributed to employees under the SHARE plan.
Supporters argue
Proponents argue this tax reduction provides a powerful incentive for corporations to adopt employee equity distribution plans, encouraging broad-based ownership and aligning employee and company interests.
Critics contend
Opponents might argue that this tax cut primarily benefits large corporations, potentially leading to significant federal revenue loss without guaranteed widespread economic benefits, and could be seen as a new corporate loophole.
Tradeoffs
The provision balances the goal of incentivizing employee ownership with the cost to federal tax revenue. The cumulative cap aims to limit the extent of the tax benefit relative to the actual value of equity distributed.
Section 2(a), new Section 12(b)
Definition of a SHARE Corporation
To qualify for the reduced tax rate, a corporation must meet several criteria: it must have an average of 500 or more full-time U.S. employees, be domiciled in the U.S., and demonstrate either a 'SHARE ratio' of at least 5% (total employee-granted stock to outstanding stock) or have distributed at least 1% of its outstanding common stock to employees in the taxable year. Non-public companies also need to conduct valid market valuations and offer employees liquidation opportunities.
Section 2(a), new Section 12(d)
Requirements for a SHARE Plan
A 'SHARE plan' must provide for periodic distributions of common stock to 'participating employees.' Key requirements include: distributions must be made without compensation (other than service), the lowest compensated 80% of eligible employees must participate, and eligible employees are full-time U.S. employees earning less than $250,000 annually (adjusted for wage growth). The distributed common stock must have the same economic and voting rights as the most widely held common stock, or can be index-based mutual funds/ETFs. Stock must vest within 5 years (or immediately upon retirement, termination without cause, or change in control) and be freely transferable once vested.
Section 2(f)
Deduction for SHARE Plan Stock Distributions
SHARE corporations are allowed to deduct the fair market value of the stock distributed to employees pursuant to a SHARE plan during the taxable year. This deduction is taken at the time of distribution, providing an additional financial incentive for companies to implement these plans.
Section 3(a), new Section 139J
Exclusion of SHARE Plan Distributions from Gross Income
This section amends the Internal Revenue Code to specify that gross income for an employee shall not include any SHARE plan stock received under a SHARE plan. This means employees receiving stock through a qualifying SHARE plan will not be taxed on the value of that stock when they receive it, making the benefit immediately tax-free for the employee.
The aggregate income tax reductions for a SHARE corporation cannot exceed the aggregate market value of stock distributed to employees (determined as of the date of issue).
Section 2(a), new Section 12(a)
Why it matters:This is a standard legislative practice to prevent excessive tax benefits from accruing beyond the direct cost of the incentivized activity, ensuring the tax break is tied to the actual value of employee equity distributed. It's a technical safeguard.
Case for: Proponents would argue this cap is essential to ensure fiscal responsibility, preventing corporations from receiving tax benefits that vastly outweigh their actual investment in employee ownership, thus making the program more palatable to fiscal conservatives.
Case against: No specific opposition is typically raised against such a safeguard, as it's designed to limit potential abuse. However, some might argue that any cap complicates the incentive structure and could be a disincentive for companies to exceed the minimum distribution requirements if the tax benefit is capped.
Estimated impact: Limits the total lifetime tax benefit a corporation can receive under the program, tying it directly to the market value of equity shared with employees.
The $250,000 limits for the safe harbor on stock granted to each employee and for the annual cash compensation threshold for 'eligible employees' will be annually adjusted for national private sector wage growth, starting after December 31, 2025.
Section 2(a), new Section 12(b)(2)(B) and 12(d)(3)
Why it matters:This is a standard legislative practice to ensure that monetary thresholds in tax code remain relevant over time, accounting for inflation and wage growth without requiring constant legislative updates.
Case for: Proponents would argue that indexing these amounts to wage growth ensures the program's relevance and fairness over time, preventing inflation from eroding the value of the stock grant limit or inadvertently expanding the pool of 'eligible employees' to higher earners as wages rise.
Case against: No specific opposition is typically raised against such indexing provisions, as they are generally seen as good governance. However, some might argue that any adjustment mechanism adds complexity to the tax code.
Estimated impact: Maintains the real value and intent of the $250,000 thresholds over time, ensuring the program's benefits remain targeted as intended.
Shares of an index-based mutual fund or exchange traded fund (ETF) can be treated as common stock for the purposes of a SHARE plan, in a ratio equivalent to their fair market value.
Section 2(a), new Section 12(d)(4)(B)
Why it matters:This is a technical flexibility provision, allowing companies, particularly those without easily divisible or liquid common stock, to still participate in the program by using a proxy for equity. It's a practical detail to broaden applicability.
Case for: Proponents would argue this flexibility is crucial for companies that might not have readily tradable common stock or prefer to offer diversified equity exposure, making the SHARE plan accessible to a wider range of businesses and potentially reducing risk for employees.
Case against: Critics might argue that allowing index funds or ETFs dilutes the direct employee ownership model, as employees are no longer directly owning a stake in their specific company. It could be seen as a way for companies to meet the letter of the law without fully embracing the spirit of direct employee ownership.
Estimated impact: Expands the types of equity that can be distributed under a SHARE plan, potentially increasing participation from companies that might otherwise be excluded.
A corporation shall not be prevented or enjoined from, or subject to any monetary or other penalty or damages for, establishing, maintaining, or making distributions of stock pursuant to, a SHARE plan, notwithstanding any other provision of Federal, State, or local law.
Section 2(g)
Why it matters:This is a preemption clause, designed to protect corporations from potential legal challenges or conflicting regulations at the state or local level that might hinder the establishment of SHARE plans. It's a significant legal protection.
Case for: Proponents would argue this clause is vital to ensure the uniform implementation and effectiveness of SHARE plans nationwide, preventing a patchwork of state and local laws from undermining the federal incentive and creating legal uncertainty for businesses.
Case against: Opponents, particularly advocates for state and local autonomy, might argue that this provision preempts legitimate state and local regulatory authority, potentially overriding local protections or preferences regarding corporate governance or employee rights.
Estimated impact: Ensures federal supremacy for SHARE plan implementation, potentially overriding conflicting state or local laws and reducing legal risk for corporations.