Technical corrections only. The engrossed version (v2) reflects the bill's passage by the Senate on March 10, 2026, and includes updated legislative formatting. There are no substantive policy changes to the text of the bill itself between v1 and v2.
HONOR Act
- Sponsor
- Sen. Cortez Masto, Catherine [D-NV]
- Committees
- Finance Committee (primary)
- Last action
- Mar 16, 2026
Bottom line
The HONOR Act eliminates tax benefits for U.S. entities paying taxes in Russia, effectively increasing their U.S. tax liability and reducing Russia's indirect revenue from U.S. taxpayers.
What it actually does
This bill amends the Internal Revenue Code of 1986 to explicitly deny U.S. companies and individuals any foreign tax credit or deduction for income taxes paid or accrued to the Russian Federation. This denial takes effect 30 days after enactment for credits and 90 days after enactment for deductions, lasting until normal trade relations with Russia are restored. The measure also explicitly overrides any existing treaty obligations that might otherwise allow such credits or deductions.
Proponents argue
Supporters argue that this bill strengthens economic pressure on Russia by preventing U.S. companies from offsetting their U.S. tax liability with taxes paid to the Russian government. They contend it closes a loophole that indirectly benefits Russia, aligning U.S. tax policy with broader sanctions and foreign policy goals to isolate the Russian Federation. Furthermore, proponents emphasize that overriding treaty obligations ensures the immediate and full effect of this denial.
Opponents contend
Opponents might argue that denying foreign tax credits and deductions could place U.S. companies operating in Russia at a competitive disadvantage compared to companies from other nations that may still receive such tax benefits from their home countries. They might also contend that this could lead to double taxation for U.S. businesses, potentially forcing them to withdraw from Russia entirely, which could have unintended consequences for global supply chains or humanitarian efforts if those companies are providing essential goods or services. Some might also raise concerns about unilaterally overriding treaty obligations, arguing it could set a problematic precedent for international relations.
The bill is very concise and can be read and understood quickly by an informed reader.
Section 2(a)
Denial of Foreign Tax Credit for Russian Federation Taxes
This provision modifies the Internal Revenue Code to prevent U.S. companies and individuals from claiming a tax credit for income taxes they pay to the Russian government. This means that any taxes paid to Russia cannot be used to reduce their U.S. tax bill, effectively increasing their overall tax burden on income earned in Russia. This measure is intended to financially penalize Russia by ensuring U.S. tax payments do not indirectly support its government.
Supporters argue
Supporters argue this provision directly impacts Russia's ability to benefit from U.S. economic activity by denying U.S. taxpayers a credit for taxes paid to the Russian government, thereby increasing the financial pressure on the regime.
Critics contend
Critics might argue that this could lead to double taxation for U.S. businesses, making it economically unfeasible for them to continue operations in Russia, potentially leading to job losses or asset abandonment.
Tradeoffs
Balances the goal of increasing economic pressure on Russia against potential financial burdens on U.S. businesses and the risk of them exiting the Russian market.
Section 2(b)
Denial of Deduction for Russian Federation Taxes
This section complements the credit denial by also preventing U.S. entities from deducting taxes paid to the Russian Federation from their taxable income. Normally, if a foreign tax credit is denied, the taxpayer might still be able to deduct the foreign taxes as an expense. This provision closes that alternative, ensuring that taxes paid to Russia cannot reduce U.S. taxable income in any way.
Section 2(c)(3)
Nonapplication of Treaty Rules
This critical provision mandates that the denial of foreign tax credits and deductions for Russian taxes must be applied regardless of any existing tax treaties between the United States and other nations. This ensures that no international agreement can circumvent the new U.S. law, making the denial absolute and immediate.
This provision explicitly states that the denial of foreign tax credits and deductions for Russian taxes shall be applied 'without regard to any treaty obligation of the United States.'
Section 2(c)(3)
Why it matters:While effective dates are standard, an explicit treaty override is a significant policy choice that could be intentionally placed in a less prominent section to avoid immediate scrutiny, or simply placed there because it logically relates to the application of the new rules.
Case for: Proponents argue this ensures the immediate and unequivocal application of the new tax policy against Russia, preventing any legal challenges or delays based on existing international agreements. It demonstrates a strong commitment to economic pressure.
Case against: Critics might contend that unilaterally overriding treaty obligations could damage the United States' reputation as a reliable treaty partner, potentially leading to diplomatic repercussions or making future treaty negotiations more difficult.
Estimated impact: Ensures the full financial impact of the credit/deduction denial, potentially affecting the U.S. Treasury's revenue and U.S. companies' tax burdens, while also having broader implications for international law and diplomacy.