No CRS summary available for this bill.
This section establishes a surcharge to the 21% corporate income tax rate (under IRC §11(b)) for taxable years beginning after December 31, 2025, for applicable corporations with a pay ratio exceeding 50:1, where the pay ratio is the ratio of the highest compensated employee's (typically the CEO's) five-year average total compensation to the five-year average median employee total compensation (i.e., as disclosed under SEC pay ratio rules). The surcharge is (1) 0.5 percentage points for ratios greater than 50:1 but not over 100:1, (2) 1 percentage point for ratios greater than 100:1 but not over 200:1, (3) 2 percentage points for ratios greater than 200:1 but not over 300:1, (4) 3 percentage points for ratios greater than 300:1 but not over 400:1, (5) 4 percentage points for ratios greater than 400:1 but not over 500:1, and (6) 5 percentage points for ratios greater than 500:1 (thus, up to a 26% maximum effective rate); it applies to public companies and private companies with average annual gross receipts of at least $100 million over the prior three taxable years (exempting smaller private companies). The section makes conforming amendments to related IRC provisions (e.g., §§280C, 852, 1445, 1446, 7874, and 860E) to apply the adjusted rate and directs the Treasury Secretary to issue regulations preventing avoidance, including via workforce composition changes such as increased contractor use.