S. 1576 — Stop Subsidizing Multimillion Dollar Corporate Bonuses Act

This section expands the scope of the tax deduction disallowance for applicable remuneration exceeding $1 million paid by publicly held corporations (under IRC §162(m)). (As background, §162(m) generally disallows deductions for pay over $1 million to specified executives of publicly held corporations to limit excessive executive compensation.) Specifically, the section (1) replaces references to "covered employee" and "employee" with "covered individual" throughout, and redefines covered individual to include any individual performing services (directly or indirectly) for the corporation (or predecessor) in taxable years beginning after December 31, 2024, or any employee who was the principal executive officer, principal financial officer, or among the three highest-compensated officers (based on Securities Exchange Act reporting) in taxable years from 2017 through 2024; (2) modifies publicly held corporation to include any corporation required to file reports under Exchange Act §15(d) (15 U.S.C. §78o(d)) at any time in the three taxable years ending with the applicable year (previously, required to file such reports for the current year); and (3) authorizes the Secretary of the Treasury to issue regulations to prevent avoidance (e.g., via pass-through entities) and for reporting. The changes apply to taxable years beginning after December 31, 2024.