Congress exempts strike pay from federal income tax
S. 2779 — Tax Cut for Striking Workers Act of 2025 · Filed by Ruben Gallego (D-AZ) · 10 cosponsors · Introduced Sep 11, 2025 · Referred to committee
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What it does
This bill excludes strike benefits paid by labor unions to their members from federal income taxation, effective January 1, 2026. Workers receiving strike pay during labor disputes, lockouts, or railway work stoppages will no longer owe federal income tax on those payments, and the benefits will be counted as earned income for purposes of the Earned Income Tax Credit.
Why we flagged it
The bill's sole operative mechanism is a targeted income-tax exclusion for strike benefits paid by labor unions to members. It is a straightforward tax relief measure for a specific class of workers during labor disputes.
What the text implies
- The exclusion applies only to compensation from tax-exempt labor organizations (IRC §501(c)(5)), meaning strike benefits from non-union sources or informal strike funds would not qualify, potentially creating incentives for workers to organize through formal unions.
- Inclusion of strike benefits in the earned income base for EITC purposes may increase refundable tax credits for lower-income striking workers, amplifying the benefit for the lowest-wage workers.
The full analysis lists 3 implications of this text.
Who stands to gain
striking workers and union members