HR 4739
SHARE Plan Act
Take action
Record your position on this measure.
Sign in to record your position, submit testimony, or contact your legislator.
Sign in to take action- Introduced
- Passed House
- Passed Senate
- To President
- Became Law
Bill overview
The SHARE Plan Act aims to encourage corporations to offer equity to their employees by providing a reduced tax rate for companies that establish and maintain ‘SHARE plans.’ These plans involve distributing company stock to employees, subject to specific requirements regarding the size of the company, the number of employees, and the value of the stock distributed. The bill also creates a mechanism for calculating the ‘SHARE ratio’ – the percentage of stock distributed to employees – and establishes rules for how stock is distributed, vested, and sold. Furthermore, the bill excludes distributions of stock under SHARE plans from an employee’s gross income.
Key provisions
- Reduces the corporate tax rate for companies meeting specific criteria (500+ full-time US employees, US domicile, and a SHARE ratio of at least 5%) that establish SHARE plans.
- Defines a ‘SHARE plan’ as a plan distributing common stock to employees without compensation (other than service).
- Establishes a ‘SHARE ratio’ to measure the amount of stock distributed to employees.
- Sets a limit of $250,000 per employee on the amount of stock that can be distributed under a SHARE plan, with an annual adjustment for wage growth.
- Requires that at least 80% of the lowest-compensated employees participate in SHARE plans.
- Stock distributions must vest after a period of employment, be saleable without restriction, and be made without compensation.
- Excludes SHARE plan stock distributions from an employee’s gross income.
- Allows for the distribution of index-based mutual funds or ETFs as a substitute for common stock.
Who is affected
Sponsors
Official sponsors from legislative records.
Primary sponsor
Cosponsors
Eleanor Holmes [D-DC-At Large] Norton
Arguments in favor
Reasons to support this legislation.
No arguments in favor have been submitted.
Submit yoursArguments opposed
Reasons to oppose this legislation.
No arguments opposed have been submitted.
Submit yoursRead the latest version inline or switch to a previous version.
119th CONGRESS — 1st Session
H. R. 4739
IN THE HOUSE OF REPRESENTATIVES
A BILL
To amend the Internal Revenue Code of 1986 to provide a reduced rate of tax for corporations that maintain a plan for distributing equity to employees, and for other purposes.
This Act may be cited as the Share Holder Allocation for Rewards to Employees Plan Act SHARE Plan Act
or as the
.
For purposes of this section—
The term SHARE corporation
means, with respect to any taxable year, any corporation—
which has an average of 500 or more full-time employees resident in the United States during such taxable year,
which demonstrates to the satisfaction of the Secretary that such corporation (as of the close of such taxable year) has—
a SHARE ratio of not less than 5 percent, or
conducted (as of the close of such taxable year) a valid market valuation of such corporation, and
provided employees with adequate opportunities during such taxable year to liquidate the employee’s holdings of such corporation’s stock at the fair market value of such stock.
A corporation shall not be treated as failing to meet the requirement of paragraph (1)(C) solely because the SHARE plan of such corporation provides that the amount of common stock of such corporation distributed under such plan to each employee shall not exceed $250,000 (determined on the basis of the fair market value of each share on the date of issuance of such share).
In the case of any taxable year beginning after December 31, 2025, the Secretary shall annually adjust the $250,000 amount specified in subparagraph (A) to take into account national private sector wage growth (determined with respect to a base year of 2024).
For purposes of this section—
The term SHARE ratio
means, with respect to any corporation for any taxable year, the ratio (expressed as a percentage) of—
the aggregate shares of common stock of such corporation which have been granted to participating employees of such corporation pursuant to a SHARE plan during such taxable year or any prior taxable year, divided by
the aggregate outstanding shares of common stock of such corporation (other than shares held by such corporation).
If such corporation demonstrates to the satisfaction of the Secretary that, during the 10 years preceding the date of the enactment of this section, such corporation made grants of common stock to eligible employees of such corporation which were not in exchange for compensation (other than service as an employee), such stock shall be taken into account under paragraph (1)(A).
In the case of any class of stock of any corporation which may be converted to common stock, such stock shall be taken into account as common stock under paragraphs (1)(B) and (2) on a fully diluted basis.
Incentive equity shall not be taken into account under subparagraph (A) or (B) of paragraph (1) (including any stock which would otherwise be so taken into account by reason of paragraph (2) or (3)).
For purposes of this paragraph, the term incentive equity
means any performance-based restricted stock granted to an employee of the corporation, any stock acquired pursuant to a performance-based incentive stock option granted to an employee of the corporation, or any similar grant of performance-based stock or convertible equity.
In the case of any stock which is forfeited (by reason of a failure to vest or otherwise), such stock shall not be taken into account under paragraph (1) after the second calendar year following the calendar year in which such stock is so forfeited.
For purposes of this section—
The term SHARE plan
means, with respect to any corporation, a plan which provides for making periodic distributions of common stock of such corporation to each participating employee of such corporation (determined as the date of each such periodic distribution).
The term participating employee
means, with respect to any corporation, any eligible employee of such corporation who is treated as a participating employee under the terms of the plan.
A plan shall not be treated as a SHARE plan unless, with respect to each periodic distribution made under such plan, the lowest compensated 80 percent of eligible employees of such corporation are participating employees with respect to such distribution.
The term eligible employee
means, with respect to any corporation, any full-time employee who is based in the United States and who does not receive $250,000 or more in annual cash compensation from such corporation (determined without regard to SHARE plan stock). The $250,000 amount specified in the preceding sentence shall be adjusted as provided in subsection (b)(2)(B).
The term common stock
means, with respect to any corporation, stock which has the same economic and voting rights as the most widely held (determined without regard to any stock issued under the SHARE plan) common stock of such corporation which has both economic and voting rights.
A plan shall not be treated as a SHARE plan unless the distributions made under such plan—
are made without compensation (other than service as an employee),
except as provided in subparagraph (B), are made in equal amounts to each participating employee (determined in the aggregate with respect to any calendar year and properly adjusted with respect any employee not employed at all times during such calendar year),
vest in the employee after such period of employment of the employee by the distributing corporation as may be specified in such plan, except that the period so specified—
may not exceed 5 years and the employer may elect whether to treat periods of employment occurring before the establishment of the plan as counting toward such period, and
shall be treated as satisfied upon retirement, termination of employment without cause, or change in control of the corporation, and
may be sold or transferred without restriction once vested.
The requirement of subparagraph (A)(ii) shall be treated as met if such requirement is met when applied separately to groups of participating employees divided (under the terms of the corporation’s SHARE plan) on the basis of the period for which such employees have been employed by the distributing corporation.
The Secretary shall make publicly available with respect to each taxable year a list of corporations which the Secretary has identified as SHARE corporations.
SHARE corporations shall be allowed a deduction equal to the fair market value (determined as of distribution) of stock distributed pursuant to a SHARE plan during the taxable year.
Notwithstanding any other provision of Federal, State, or local law, a corporation shall not be prevented or enjoined from, or subject to any monetary or other penalty or damages for, establishing, maintaining, or making distributions of stock pursuant to, a SHARE plan.
The amendments made by this section shall apply to taxable years beginning more than 1 year after the date of the enactment of this Act.
SHARE planhas the meaning given such term in section 12.
The term SHARE plan stock
means, with respect to any employee, stock received by such employee under a SHARE plan.