HR 2777
S-CAP Act of 2025
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Bill overview
The S-CAP Act of 2025 seeks to change the rules for small businesses organized as S corporations. Specifically, it raises the minimum number of shareholders required to qualify as an S corporation from 100 to 250. This change aims to make it easier for smaller businesses to maintain their S corporation status. The provisions will take effect starting in 2026.
Key provisions
- Increases the minimum number of shareholders required for an S corporation from 100 to 250.
- Amends Section 1361(b)(1)(A) of the Internal Revenue Code.
- The change applies to taxable years beginning after December 31, 2025.
Who is affected
- Small business owners
- S corporations
- Shareholders of S corporations
Notable changes
- Changes the existing requirement for S corporation shareholder count.
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119th CONGRESS — 1st Session
H. R. 2777
IN THE HOUSE OF REPRESENTATIVES
A BILL
To amend the Internal Revenue Code of 1986 to increase the number of eligible shareholders of an S corporation.
This Act may be cited as the S-Corporation Additional Participation Act of 2025 S-CAP Act of 2025
or the
.
100and inserting
250.
The amendment made by this section shall apply to taxable years beginning after December 31, 2025.