Stock Buyback Accountability Act of 2026
Officially: “Stock Buyback Accountability Act of 2026” Read the full text
What it does
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1Short title
This section gives the Act its official name, the Stock Buyback Accountability Act of 2026.
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1. Short title This Act may be cited as the Stock Buyback Accountability Act of 2026 .
2Modifications to tax on repurchase of corporate stock
This section would raise the excise tax that corporations pay on repurchases of their own stock under section 4501(a) of the Internal Revenue Code, from 1 percent of the value of the stock repurchased to 4 percent. It would also narrow the rule in section 4501(c)(3) that reduces the amount of stock repurchases subject to the tax by the fair market value of stock a corporation issues or provides during the year. Under the new exception, that reduction would no longer be allowed for the fair market value of any stock issued or provided to: an employee who qualifies as a covered employee (as defined in section 162(m)(3)) or a specified covered employee (as defined in section 162(m)(7)(C)); or any other person, who is not such an employee, who receives remuneration (as defined in section 162(m)(4)) of more than $1,000,000 in a taxable year beginning after December 31, 2025, for services that person performed for the corporation or a specified affiliate of the corporation. The higher 4 percent rate would apply to stock repurchases made after the date this Act is enacted. For a corporation's taxable year that includes the enactment date, the reduction amount otherwise allowed under section 4501(c)(3) for that year would be split in proportion to days: the share of the reduction applied against stock repurchased on or before the enactment date would equal the total reduction multiplied by the number of days in the year on or before enactment divided by the total number of days in the year, and the remainder of the reduction would be applied against stock repurchased after the enactment date. The new exception narrowing whose stock counts toward the reduction would apply to stock issued or provided in taxable years that end more than 90 days after the date of enactment.
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2. Modifications to tax on repurchase of corporate stock (a) Increase in rate of tax Section 4501(a) of the Internal Revenue Code of 1986 is amended by striking 1 percent and inserting 4 percent . (b) Modification of adjustments Section 4501(c)(3) of the Internal Revenue Code of 1986 is amended— (1) by striking The amount and inserting the following: (A) In general The amount , and (2) by adding at the end the following new subparagraph: (B) Exception for stock issued to certain persons Subparagraph (A) shall not apply to so much of the fair market value of any stock issued or provided to— (i) an employee who is a covered employee (within the meaning of section 162(m)(3)) or a specified covered employee (within the meaning of section 162(m)(7)(C)), or (ii) a person (other than an employee described in clause (i)) who receives remuneration (within the meaning of section 162(m)(4)) during any taxable year of the covered corporation beginning after December 31, 2025, in excess of $1,000,000 for services performed by such person for such covered corporation or any specified affiliate of such covered corporation. . (c) Effective date (1) Rate (A) In general The amendment made by subsection (a) section shall apply to repurchases (within the meaning of section 4501(c) of the Internal Revenue Code of 1986) of stock after the date of the enactment of this Act. (B) Special rule For purposes of applying section 4501(c)(3) of the Internal Revenue Code to any taxable year which includes the date of the enactment of this Act, the amount of the reduction determined under such section for such taxable year shall be applied— (i) by reducing stock repurchased on or before such date of enactment in the amount which bears the same ratio to the total amount of the reduction so determined for such taxable year as— (I) the number of days in the taxable year on or before such date of enactment, bears to (II) the total number of days in such taxable year, and (ii) by reducing stock repurchased after such date of the enactment by the excess (if any) of the total amount of the reduction so determined for such taxable year over the amount of the reduction determined under clause (i). (2) Adjustments The amendments made by subsection (b) shall apply to stock issued or provided in taxable years ending more than 90 days after the date of the enactment of this Act.
Where it is
In the Senate.