S. 3155 – Stop Subsidizing Multimillion Dollar Corporate Bonuses Act

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Updated January 20, 2026 at 12:32 PM UTC

The Stop Subsidizing Multimillion Dollar Corporate Bonuses Act changes the tax code to stop companies from deducting large bonuses paid to top executives. It broadens who is considered a “covered individual” and expands the definition of a publicly‑held corporation, so that more high‑paid officers lose the tax deduction for their compensation. The Treasury Secretary is given authority to issue rules to enforce the changes. The rules apply to tax years beginning after December 31, 2022.

Key Provisions

Amends Section 162(m) to replace terms like “employee” with “individual” and “covered employee” with “covered individual,” widening the scope of the deduction denial.
Defines a “covered individual” as anyone providing services after 2022 or any former CEO/CFO (or similar officer) from 2016‑2022 who was among the three highest‑paid officers and whose compensation was reported to shareholders.
Expands the definition of a publicly‑held corporation to include any corporation that filed reports under section 15(d) of the Securities Exchange Act in the three‑year period ending with the taxable year.
Adds a new paragraph giving the Secretary of the Treasury authority to issue regulations on reporting and preventing avoidance through pass‑through entities.
Sets the amendments to take effect for taxable years beginning after December 31, 2022.

Legislative Activity

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1 earlier action

SenateIntro Referral Latest Action

Read twice and referred to the Committee on Finance. (Sponsor introductory remarks on measure: CR S5216)

Finance Committee

October 26, 2023

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SenateIntro Referral

Introduced in Senate

October 26, 2023

SenateIntro Referral

Read twice and referred to the Committee on Finance. (Sponsor introductory remarks on measure: CR S5216)

Finance Committee

October 26, 2023

Floor Debate

3 members

What members said about S. 3155 on the floor

1 Republican2 Democrats

Sen. Jack ReedD-RI · Oct 26, 2023

Madam President, I am reintroducing the Stop Subsidizing Multimillion Dollar Corporate Bonuses Act with Senators Blumenthal, Whitehouse, Merkley, Baldwin, Warren, Van Hollen, and Sanders. This…

Madam President, I am reintroducing the Stop Subsidizing Multimillion Dollar Corporate Bonuses Act with Senators Blumenthal, Whitehouse, Merkley, Baldwin, Warren, Van Hollen, and Sanders. This legislation would finally fully close a loophole that allows publicly traded corporations to deduct the cost of multimillion-dollar bonuses from their corporate tax bills. At a time when the gulf in pay between CEOs and average workers is 272 to 1, it is infuriating that U.S. taxpayers are being forced to subsidize lavish executive compensation packages, but that is what is happening.

Under section 162(m) of the Tax Code, publicly traded corporations cannot deduct more than $1 million in compensation paid to their top executives. But section 162(m) does not cover compensation paid to all public company employees, and corporations have long exploited this loophole to claim tax deductions for executive compensation packages that far exceed $1 million. Indeed, publicly traded corporations are offering these lucrative compensation deals to ever increasing numbers of executives--not just a few at the very top of the organization.

Both Republican and Democratic administrations have recognized the need to close loopholes in section 162(m). Indeed, both President Trump and President Biden signed laws based on earlier versions of my legislation in order to curtail the abuse of this deduction. This includes ensuring that performance-based compensation is actualjy counted as compensation under section 162(m) and increasing the number of highly paid executives who are subject to section 162(m). Partially tightening the law in these ways has saved taxpayers well over $9.2 billion. But the full loophole has still not been closed and taxpayers continue to subsidize billions of dollars in extravagant compensation.

The Stop Subsidizing Multimillion Dollar Corporate Bonuses Act would address the remaining gaps by applying section 162(m) restrictions to all employees of publicly traded corporations so that all compensation is subject to a deductibility cap of $1 million per employee.

To be clear, under my bill, publicly traded corporations would still be able to pay their executives as much as they desire, but individual compensation packages above and beyond $1 million would no longer be subsidized through our Tax Code. This is a matter of fairness. It ensures that corporations and shareholders--not hard-working taxpayers--are shouldering the cost of the multimillion-dollar compensation packages they provide to their top earners.

I thank Public Citizen, Americans for Financial Reform, the AFL-CIO, the International Brotherhood of Teamsters, MIT Professor Simon Johnson, Take On Wall Street, and the Institute for Policy Studies, Global Economy Project for their support. I urge our colleagues to join us in cosponsoring this legislation and pressing for its passage.

Sen. Jack ReedD-RI · Oct 26, 2023

Madam President, I am reintroducing the Stop Subsidizing Multimillion Dollar Corporate Bonuses Act with Senators Blumenthal, Whitehouse, Merkley, Baldwin, Warren, Van Hollen, and Sanders. This…

Madam President, I am reintroducing the Stop Subsidizing Multimillion Dollar Corporate Bonuses Act with Senators Blumenthal, Whitehouse, Merkley, Baldwin, Warren, Van Hollen, and Sanders. This legislation would finally fully close a loophole that allows publicly traded corporations to deduct the cost of multimillion-dollar bonuses from their corporate tax bills. At a time when the gulf in pay between CEOs and average workers is 272 to 1, it is infuriating that U.S. taxpayers are being forced to subsidize lavish executive compensation packages, but that is what is happening.

Under section 162(m) of the Tax Code, publicly traded corporations cannot deduct more than $1 million in compensation paid to their top executives. But section 162(m) does not cover compensation paid to all public company employees, and corporations have long exploited this loophole to claim tax deductions for executive compensation packages that far exceed $1 million. Indeed, publicly traded corporations are offering these lucrative compensation deals to ever increasing numbers of executives--not just a few at the very top of the organization.

Both Republican and Democratic administrations have recognized the need to close loopholes in section 162(m). Indeed, both President Trump and President Biden signed laws based on earlier versions of my legislation in order to curtail the abuse of this deduction. This includes ensuring that performance-based compensation is actualjy counted as compensation under section 162(m) and increasing the number of highly paid executives who are subject to section 162(m). Partially tightening the law in these ways has saved taxpayers well over $9.2 billion. But the full loophole has still not been closed and taxpayers continue to subsidize billions of dollars in extravagant compensation.

The Stop Subsidizing Multimillion Dollar Corporate Bonuses Act would address the remaining gaps by applying section 162(m) restrictions to all employees of publicly traded corporations so that all compensation is subject to a deductibility cap of $1 million per employee.

To be clear, under my bill, publicly traded corporations would still be able to pay their executives as much as they desire, but individual compensation packages above and beyond $1 million would no longer be subsidized through our Tax Code. This is a matter of fairness. It ensures that corporations and shareholders--not hard-working taxpayers--are shouldering the cost of the multimillion-dollar compensation packages they provide to their top earners.

I thank Public Citizen, Americans for Financial Reform, the AFL-CIO, the International Brotherhood of Teamsters, MIT Professor Simon Johnson, Take On Wall Street, and the Institute for Policy Studies, Global Economy Project for their support. I urge our colleagues to join us in cosponsoring this legislation and pressing for its passage.

Sen. Richard J. DurbinD-IL · Oct 26, 2023

Madam President, I ask unanimous consent that the text of the bill be printed in the Record.

Sen. John ThuneR-SD · Oct 26, 2023

Madam President, I ask unanimous consent that the text of the bill be printed in the Record.

Bill Text

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Introduced in SenateIssued October 26, 2023

II

118th CONGRESS

1st Session

S. 3155

IN THE SENATE OF THE UNITED STATES

October 26, 2023

Mr. Reed (for himself, Mr. Blumenthal, Mr. Whitehouse, Ms. Baldwin, Ms. Warren, Mr. Merkley, Mr. Van Hollen, and Mr. Sanders) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to expand the denial of deduction for certain excessive employee remuneration, and for other purposes.

1.

Short title

This Act may be cited as the Stop Subsidizing Multimillion Dollar Corporate Bonuses Act.

2.

Expansion of denial of deduction for certain excessive employee remuneration

(a)

In general

(1)

Expansion

Section 162(m) of the Internal Revenue Code of 1986 is amended—

(A)

by striking applicable employee remuneration each place it appears in paragraphs (1), (4), and (5)(E) and inserting applicable remuneration,

(B)

by striking covered employee each place it appears in paragraphs (1) and (4) and inserting covered individual, and

(C)

by striking employee each place it appears in paragraph (1) and subparagraphs (A), (C)(ii), and (E) of paragraph (4) and inserting individual.

(2)

Covered individual

Paragraph (3) of section 162(m) of such Code is amended to read as follows:

(3)

Covered individual

For purposes of this subsection, the term covered individual means—

(A)

any individual who performs services (directly or indirectly) for the taxpayer (or any predecessor) for any taxable year beginning after December 31, 2022, or

(B)

any employee—

(i)

who was the principal executive officer or principal financial officer of the taxpayer (or any predecessor) at any time during any preceding taxable year beginning after December 31, 2016, and before January 1, 2023, or who was an individual acting in such a capacity, or

(ii)

the total compensation of whom for any taxable year described in clause (i) was required to be reported to shareholders under the Securities Exchange Act of 1934 by reason of such individual being among the 3 highest compensated officers for the taxable year (other than any individual described in clause (i)).

Such term shall include any employee who would be described in subparagraph (B)(ii) if the reporting described in such subparagraph were required as so described.

.

(3)

Conforming amendments

(A)

The heading for section 162(m) of the Internal Revenue Code of 1986 is amended by striking employee.

(B)

The heading for section 162(m)(4) is amended by striking employee.

(b)

Modification of definition of publicly held corporation

Section 162(m)(2) of the Internal Revenue Code of 1986 is amended—

(1)

by inserting , with respect to any taxable year, after means, and

(2)

by striking subparagraph (B) and inserting the following:

(B)

that was required to file reports under section 15(d) of such Act (15 U.S.C. 78o(d)) at any time during the 3-taxable year period ending with such taxable year.

.

(c)

Regulatory authority

(1)

In general

Section 162(m) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

(7)

Regulations

The Secretary may prescribe such guidance, rules, or regulations as are necessary to carry out the purposes of this subsection, including regulations—

(A)

with respect to reporting, and

(B)

to prevent avoidance of the purposes of this section by providing compensation through a pass-through or other entity.

.

(2)

Conforming amendment

Paragraph (6) of section 162(m) of such Code is amended by striking subparagraph (H).

(d)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2022.