SHARE Plan Act

Bill Number

H.R. 4739

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-07-23: Referred to the House Committee on Ways and Means.

Last Updated

2025-11-29T09:05:19Z

AI-Generated Summary

Purpose

The SHARE Plan Act (H.R. 4739) aims to encourage corporations to share ownership with employees by offering tax incentives. It promotes broader employee equity participation, particularly among lower- and middle-income workers, to foster economic alignment between companies and their workforce.

Key Provisions

• Reduced Corporate Tax Rate: Eligible corporations receive a 3 percentage point reduction in their corporate income tax rate (under IRC Section 11). This applies only up to the total market value of stock distributed under the plan, preventing unlimited tax savings.
• Definition of SHARE Corporation: A qualifying corporation must:
• Have at least 500 full-time U.S.-based employees on average.
• Be domiciled in the U.S.
• Maintain a "SHARE ratio" of at least 5% (percentage of total outstanding common stock granted to employees via the plan) or distribute at least 1% of outstanding shares annually under the plan.
• For non-publicly traded companies, provide fair market valuations and opportunities for employees to sell shares at fair value.
• SHARE Plan Requirements: The plan must:
• Distribute common stock (or equivalent value in index-based mutual funds/ETFs) periodically to at least the lowest-paid 80% of eligible full-time U.S. employees (those earning under $250,000 annually in cash compensation, adjusted for inflation after 2025).
• Provide equal distributions per employee (adjusted for service length), without requiring additional payment beyond employment.
• Include vesting over up to 5 years, with automatic vesting on retirement, termination without cause, or company change of control; shares become freely transferable once vested.
• Cap individual distributions at $250,000 in fair market value (adjusted annually for wage growth).
• Exclusions and Treatments:
• "Incentive equity" (e.g., performance-based stock options) is excluded from calculations.
• Forfeited stock is ignored after two years.
• Prior stock grants (up to 10 years before enactment) can count if not tied to compensation.
• Additional Benefits:
• Corporations get a tax deduction for the fair market value of distributed stock.
• Employee receipts of SHARE plan stock are excluded from gross income (not taxed as income).
• The Treasury Secretary must publish an annual list of qualifying SHARE corporations.
• No federal, state, or local laws can block or penalize implementation of these plans.
• Aggregation Rules: Controlled groups of companies (e.g., subsidiaries) can consolidate plans under IRS guidance.
• Effective Dates: Corporate tax benefits apply to taxable years starting more than one year after enactment; employee income exclusion applies to stock received after enactment.

Significant Changes to Existing Law

• Introduces a new IRC Section 12 for the reduced corporate tax rate, shifting Section 12 to 13.
• Adds IRC Section 139J to exclude SHARE plan stock from employees' gross income, expanding tax-free fringe benefits.
• Creates a novel "SHARE ratio" metric and plan standards, which did not previously exist, while carving out performance-based equity from qualifying distributions to avoid overlap with existing incentive programs like stock options.
• Overrides potential state/local barriers to equity plans, providing federal preemption not previously available.

Potential Impacts

• On Government Agencies: The IRS will need to verify eligibility, conduct valuations for private companies, publish lists, and issue guidance on aggregation—potentially increasing administrative workload and requiring new regulations.
• On Citizens (Employees): Broadens tax-free access to company ownership for non-highly compensated U.S. workers, potentially increasing wealth-building opportunities and financial security through vested shares, though vesting periods may delay benefits.
• On Corporations: Incentivizes equity-sharing plans, which could improve employee retention and morale but add compliance costs for plan setup and reporting; tax savings may lower effective rates for qualifiers.
• On International Relations: Minimal direct impact, as benefits are limited to U.S.-domiciled firms with U.S. employees; foreign companies might indirectly compete less favorably without similar incentives.

Main Stakeholders Affected

• Corporations: Especially mid-to-large U.S.-based firms (500+ employees) seeking tax relief and employee engagement tools.
• Employees: Primarily lower- and middle-income full-time U.S. workers eligible for tax-free stock, excluding top earners and those on performance incentives.
• IRS and Treasury Department: Responsible for oversight, certifications, and public disclosures.
• Shareholders: Existing owners may see dilution from new stock issuances but potential benefits from a more motivated workforce.
• State and Local Governments: Affected by federal preemption of laws hindering plans, possibly influencing local tax or labor policies.

Notable Legal, Constitutional, or Political Implications

• Legal: Establishes federal protection against state/local interference (preemption under Supremacy Clause), reducing litigation risks for companies but inviting challenges if plans are seen as discriminatory (e.g., excluding high earners). The $250,000 cap and inflation adjustments provide clear, enforceable limits.
• Constitutional: Aligns with Congress's taxing and spending powers (Article I), promoting economic policy without direct First Amendment or equal protection issues, though equity exclusions might raise fairness questions in court.
• Political: Bipartisan sponsorship signals cross-aisle support for worker ownership; could influence corporate governance debates by favoring broad equity over executive incentives, potentially reducing income inequality but facing opposition from firms reliant on narrow stock programs. No major international treaty conflicts anticipated.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Suozzi, Thomas R. [D-NY-3]

Cosponsors (13)

Rep. Kelly, Mike [R-PA-16], Rep. Thompson, Mike [D-CA-4], Rep. Fitzpatrick, Brian K. [R-PA-1], Rep. Larson, John B. [D-CT-1], Rep. Malliotakis, Nicole [R-NY-11], Rep. Panetta, Jimmy [D-CA-19], Rep. Tenney, Claudia [R-NY-24], Rep. Sewell, Terri A. [D-AL-7], Rep. Smucker, Lloyd [R-PA-11], Rep. Horsford, Steven [D-NV-4], Del. Norton, Eleanor Holmes [D-DC-At Large], Rep. Bilirakis, Gus M. [R-FL-12], Rep. Nunn, Zachary [R-IA-3]

Recent Actions

• 2025-07-23: Referred to the House Committee on Ways and Means.
• 2025-07-23: Introduced in House
• 2025-07-23: Introduced in House

Bill Versions

• Share Holder Allocation for Rewards to Employees Plan Act — issued 2025-07-23 — PDF (12 pages)