HONOR Act
- Sponsor
- Rep. Schneider, Bradley Scott [D-IL-10]
- Committees
- Ways and Means Committee (primary)
- Last action
- Jul 16, 2026
Bottom line
The bill aims to increase the tax burden on U.S. entities operating in or earning income from Russia, thereby reducing Russia's revenue from foreign investment and discouraging economic activity with the country.
What it actually does
This bill amends the Internal Revenue Code of 1986 to deny U.S. companies and individuals the ability to claim foreign tax credits for income taxes paid or accrued to the Russian Federation. This means that any taxes paid to Russia cannot be offset against U.S. tax liability, effectively subjecting income earned in Russia to double taxation for U.S. taxpayers. The denial applies for a specific period, beginning 30 days after the bill's enactment and lasting until normal trade relations with Russia are restored.
Proponents argue
Proponents argue that this measure is a critical tool to further isolate the Russian Federation economically and pressure its government. By denying foreign tax credits, the bill increases the cost of doing business in Russia for U.S. entities, reducing the financial benefits Russia derives from such activities and aligning U.S. tax policy with broader foreign policy goals of sanctioning Russia for its actions.
Opponents contend
Opponents might argue that this measure could disproportionately harm U.S. companies and investors who still have legitimate operations or assets in Russia, potentially forcing them to incur significant financial losses or withdraw under unfavorable conditions. They might also contend that it could complicate international tax relations and potentially lead to retaliatory measures from Russia, further destabilizing global markets without achieving the desired foreign policy outcome.
The bill text is very short and can be read quickly, making it accessible for immediate evaluation.
Section 2(a), amending Section 901(j)(2) of the Internal Revenue Code of 1986
Denial of Foreign Tax Credit for Russian Federation Taxes
This provision amends the Internal Revenue Code to prevent U.S. taxpayers from claiming a credit for income taxes paid to the Russian Federation. This means that U.S. companies and individuals operating in Russia will not be able to reduce their U.S. tax liability by the amount of taxes they pay to the Russian government, effectively subjecting that income to taxation by both countries. The denial takes effect 30 days after the bill's enactment and continues until the U.S. restores normal trade relations with Russia.
Supporters argue
Supporters argue this provision directly targets Russia's financial resources by making it more expensive for U.S. entities to operate there, thereby reducing the economic benefits Russia gains from foreign investment and trade. It aligns U.S. tax policy with broader sanctions efforts.
Critics contend
Critics might argue that this provision could primarily harm U.S. businesses and investors who are already navigating complex geopolitical challenges, rather than significantly impacting the Russian government. It could also lead to U.S. companies divesting from Russia at a loss, potentially allowing Russian or other foreign entities to acquire assets cheaply.
Tradeoffs
The bill balances the foreign policy goal of pressuring Russia with potential financial burdens on U.S. businesses and the complexities of international tax law.