Tax Cut for Striking Workers Act of 2026
- Sponsor
- Rep. Horsford, Steven [D-NV-4]
- Committees
- Ways and Means Committee (primary)
- Last action
- May 14, 2026
Bottom line
This bill provides financial relief to striking workers by making compensation received from labor organizations during strikes, lockouts, or work stoppages tax-free and excluded from earned income for EITC purposes.
What it actually does
This bill amends the Internal Revenue Code of 1986 to exclude "qualified strike benefits" from gross income, making them tax-exempt. It also modifies the Earned Income Tax Credit (EITC) calculation to ensure these benefits are not considered earned income, potentially increasing eligibility or benefit amounts for low-to-moderate-income striking workers. The changes apply to compensation received after December 31, 2026.
Proponents argue
Supporters argue this bill provides essential financial relief to workers who are exercising their right to strike, ensuring that compensation meant to replace lost wages during a labor dispute is not diminished by taxation. They contend it levels the playing field for workers during difficult economic times and strengthens the ability of labor organizations to support their members, thereby fostering fair collective bargaining.
Opponents contend
Opponents might argue that excluding strike benefits from gross income creates an unfair tax advantage compared to other forms of income, including regular wages or other income replacement benefits, which are generally taxed. They may also raise concerns about the potential revenue loss to the federal government and the precedent it sets for other types of income.
The bill is very short and clear, making it highly accessible for a quick and informed evaluation.
Section 2(a), inserting new Section 139M into the Internal Revenue Code.
Exclusion of Qualified Strike Benefits from Gross Income
This provision establishes a new section in the tax code, Section 139M, which states that compensation received by an individual from a labor organization during a strike, lockout, or work stoppage will not be counted as gross income for tax purposes. This means that these "qualified strike benefits" will be tax-free, providing financial relief to workers who are not receiving their regular wages due to a labor dispute.
Supporters argue
Supporters argue that this exclusion provides crucial support to workers during economically challenging periods of a strike, ensuring that their efforts to secure better working conditions are not undermined by immediate tax burdens on their limited replacement income. They emphasize that these benefits are not regular wages but rather a form of hardship assistance.
Critics contend
Critics might contend that this provision creates an inequitable tax system where one form of income replacement is treated differently from others, such as unemployment benefits or disability payments, which are generally taxable. They may argue it could incentivize strikes by reducing the financial burden on participants.
Tradeoffs
The provision balances the goal of supporting workers during labor disputes against concerns about tax equity and potential impacts on federal revenue. It also navigates the tension between facilitating collective bargaining and maintaining a broad tax base.
Section 2(b), amending Section 32(c)(2)(B)(vi) of the Internal Revenue Code.
Exclusion of Strike Benefits for Earned Income Tax Credit Calculation
This amendment ensures that the newly tax-exempt qualified strike benefits are also excluded from the calculation of "earned income" for the purposes of the Earned Income Tax Credit (EITC). This means that receiving strike benefits will not negatively affect a worker's eligibility for the EITC or reduce the amount of credit they might receive, potentially increasing financial support for low-to-moderate-income striking workers.
Defines "qualified strike benefits" as compensation provided by a labor organization described in section 501(c)(5) and exempt from tax under section 501(a) to a member, if such compensation is provided as a replacement for lost wages due to a strike or lockout (as defined in section 2 of the National Labor Relations Act) or a work stoppage (under the Railway Labor Act).
Section 2(a), new Section 139M(b).
Why it matters:This is standard legislative practice to ensure legal precision and avoid redundancy by referencing existing statutory definitions. It is not intended to be evasive but requires legal literacy.
Case for: Supporters would argue that precise legal definitions are necessary to prevent abuse and ensure the benefits are only applied as intended to legitimate labor disputes and organizations.
Case against: Critics might argue that the reliance on multiple external legal definitions makes the bill less transparent and harder for the average citizen or even tax preparer to fully understand without specialized legal research.
Estimated impact: Clarifies the scope of the tax exclusion, limiting it to specific types of organizations and labor actions, thus defining the universe of beneficiaries.