S. 2818 — Tax Excessive CEO Pay Act of 2025

This section establishes a surcharge on 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 annualized compensation to the median employee's (per SEC regulations at 17 CFR §229.402(u)(1)(iii), averaged over the prior five years). The surcharge increases the tax rate by the following percentage points: (1) 0.5 percentage points if greater than 50:1 but not greater than 100:1; (2) 1 percentage point if greater than 100:1 but not greater than 200:1; (3) 2 percentage points if greater than 200:1 but not greater than 300:1; (4) 3 percentage points if greater than 300:1 but not greater than 400:1; (5) 4 percentage points if greater than 400:1 but not greater than 500:1; and (6) 5 percentage points if greater than 500:1 (thus, up to 26% from 21%). The provision applies to publicly traded corporations and private corporations with average annual gross receipts of at least $100 million over the prior three taxable years (which must calculate the ratio per Treasury regulations); it exempts private corporations below that receipts threshold. The section makes conforming amendments to various IRC provisions (e.g., §§280C, 852, 1445, 1446, 7874, and 860E) to reference the applicable corporate rate after the surcharge and directs the Secretary of the Treasury to issue anti-avoidance regulations, including to address workforce composition changes such as increased use of contractors.