Companies without a qualifying profit-sharing plan would face a choice between establishing one or forgoing the tax deduction for executive compensation. The IRS would gain authority to intervene if a company offsets profit-sharing costs by reducing workers' regular wages or benefits.

Bill would strip executive pay deductions from companies without profit-sharing

Q: What does this do?

HR 6418 would eliminate the tax deduction companies currently take for executive compensation unless they operate a qualifying profit-sharing program for regular employees. To qualify, a plan must distribute at least 5 percent of the company's net income to workers, include part-time employees who have been there at least one year, and spread payments fairly across the workforce. The bill applies to companies above a certain revenue threshold and does not legally require profit-sharing or cap executive pay.

In committeeH.R. 6418Latest action Dec 3, 2025

Sponsor: Bonnie Watson Coleman · Representative · NJ

AIDecoded by AI · checked against the record

Read the official text

Official title: Employee Profit-Sharing Encouragement Act of 2025

119th Congress

Topics: Jobs & the economy

Introduced: December 3, 2025

Read the official bill on Congress.gov

In plain words

The plain-language version comes first. The official text is always the reference.

HR 6418 removes the executive pay for large companies that don't share at least 5% of net income with workers.

50-second read · 4 questions answered below

What does this do?

HR 6418 would eliminate the companies currently take for executive compensation unless they operate a qualifying profit-sharing program for regular employees. To qualify, a plan must distribute at least 5 percent of the company's net income to workers, include part-time employees who have been there at least one year, and spread payments fairly across the workforce. The bill applies to companies above a certain revenue threshold and does not legally require profit-sharing or cap executive pay.

Who does it affect?

The bill primarily affects larger employers and their highest-paid executives. Rank-and-file employees at those companies, including part-time workers with at least one year of tenure, are also directly affected.

Why does it matter?

Companies without a qualifying profit-sharing plan would face a choice between establishing one or forgoing the for executive compensation. The IRS would gain authority to intervene if a company offsets profit-sharing costs by reducing workers' regular wages or benefits.

AI-drafted summary. Check it against the official text before you act on it.

Read the official bill on Congress.gov

Make the call

Three steps: where you stand, your script, the call.

Where do you stand?

Where does it stand?

IntroducedDec 3, 2025
House committeeYou are here · Dec 3, 2025
House vote
Senate
The president's desk

Right now: a House committee is reviewing it. If the Senate changes it, it goes back to the House before reaching the president.

Latest action: December 3, 2025 — Referred to the House Committee on Ways and Means.

See how a call works

Share on WhatsApp