Scott Rodrick
The Retire Through Ownership Act, S. 2403, which was passed unanimously in the Senate in October 2025, was passed in the House by a 401-14 vote on September 16 and will now go to President Trump to be signed into law.
Scott Rodrick
Rep. Perry Scott (R-PA) introduced the Employee Ownership Fairness Act of 2026 in the House on July 20. The bill is a companion to the Employee Ownership Fairness Act of 2025, introduced by Sen. Bill Cassidy (R-LA) in the Senate on May 13, 2025, and discussed on this blog at that time. The bills would largely remove limits on ESOP contributions and allocations.
Scott Rodrick
California Governor Gavin Newsom, who stated on May 19 that "You cannot save democracy unless we democratize the economy," issued an executive order on AI on May 21 that in part directs the state government to review opportunities to expand employee ownership and review policies to provide displaced workers with a safety net that could include stock and other forms of equity.
Scott Rodrick
The Employee-Owned S Corporations of America (ESCA) reports that the Organisation for Economic Co-operation and Development (OECD) announced that a “side by side” arrangement will exempt all US companies from a new 15% tax on the global income of large multinational corporations. Senior US Treasury staff members have assured ESCA representatives that the US exemption will cover multinational US ESOP-owned S corporations, which otherwise would be subject to entity-level taxes.
Scott Rodrick
On November 13, the IRS announced its annual cost-of-living (COLA) increases to plan limits for 2026, which are detailed in Notice 2025-67 (PDF). The most important figures for ESOPs and related plans are:
Scott Rodrick
In a keynote address today to the ESOP Association, Secretary of Labor Lori Chavez-DeRemer expressed her support of ESOPs. “I want you to know that the Trump administration recognizes the real transformative power of employee stock ownership plans.” Referring to complaints by some in the ESOP community regarding how the Department of Labor (DOL) has conducted its regulatory oversight of ESOPs, she commented that “we’re here to undo the culture of harassment. . . . I understand how poor regulation and misguided agency agendas can directly impact business success. . . . It is my mission to support you, not regulate you into oblivion.”
Scott Rodrick
Update: As of March 7, the recently terminated head of the Division of Employee Ownership is to be reinstated March 10.
The National Association of Plan Advisors (NAPA) reports that Hilary Abell, who in July 2024 was appointed as the head of the Division of Employee Ownership at the Employee Benefits Security Administration (EBSA) within the U.S. Department of Labor (DOL), has been terminated as part of a wave of actions across the U.S. government.
Scott Rodrick
Valuation is a crucial topic for ESOPs because in closely held companies, the price paid for company stock in transactions must be based on an independent outside appraisal, and likewise ESOP-held stock must be appraised at least annually. Much ESOP litigation over the years has revolved around valuation.
The Department of Labor issued proposed ESOP valuation regulations in 1988 but never finalized them. ESOP professionals have urged the DOL to issue formal guidance instead of leaving it to the courts, and the SECURE 2.0 Act of 2022 (as part of the WORK Act) directed the DOL to develop formal guidance on valuation. In October 2024, the DOL sent a new proposed ESOP valuation regulation to the Office of Management and Budget (OMB) for inter-agency review of costs and benefits. The OMB has now completed its review of the regulation.
Scott Rodrick
We reported on August 9 that an IRS press release issued that day stated that as part of “an expanded focus on ensuring high-income taxpayers pay what they owe,” it was warning “businesses and tax professionals to be alert to a range of compliance issues that can be associated with" ESOPs. On September 19, we reported that in discussions with Employee-Owned S Corporations of America (ESCA), the IRS clarified that the press release was not an official notice and that the focus was only on a small subgroup of practitioners and a specific ESOP structure used for tax avoidance.
