Employee Ownership Blog

Promotion and Expansion of Private Employee Ownership Act Introduced in Senate

Senators Steve Daines (R-MT) and Maggie Hassan (D-NH), along with a bipartisan group of cosponsors, have introduced the Promotion and Expansion of Private Employee Ownership Act of 2025 (PDF). This is a companion bill to H.R. 3105, introduced by Representatives Mike Kelly (R-PA, chair of the House Ways and Means Committee) and Jimmy Panetta (D-CA). The bill has four components:

  1. It provides that sellers to an ESOP that owns at least 30% of the stock in an S corporation can defer tax on the gain by reinvesting in stocks and bonds of US operating companies. Currently, sales to S corporation ESOPs that occur after 2027 will qualify for a 10% deferral of gains.
  2. It requires the Secretary of the Treasury to establish an S Corporation Employee Ownership Assistance Office. The office would focus on education and outreach.
  3. It provides that at companies that qualified for contracting or other government preference programs for women, minority, or disabled veteran-owned businesses before more than 49% of the stock was acquired by an ESOP, after this threshold is passed, each ESOP participant is treated as directly owning their proportionate share of ESOP-held stock. This means that the company will still qualify if a majority of its stock is allocated to individuals meeting the criteria.
  4. It establishes an Advocate for Employee Ownership within the Employee Ownership Initiative at the Department of Labor. There is currently a Division of Employee Ownership in the DOL, but its function is more informational. The Advocate would also have an informational function, but would also work with other federal agencies to identify legislative and regulatory opportunities for expanding employee ownership. The law would require an annual report to be filed with the Senate Health, Education, Labor and Pensions Committee on its activities.

Language very similar to this proposal was added to the Employee Ownership Representation Act that was passed out of the Senate Health, Education, Labor and Pensions committee on July 30.