Congress raises buyback tax but carves out executive stock deals
S. 4796 — Stock Buyback Accountability Act of 2026 · Filed by Chuck Schumer (D-NY) · 6 cosponsors · Introduced Jun 16, 2026 · Referred to committee
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What it does
This bill increases the federal excise tax on corporate stock buybacks from 1% to 4%, effective immediately upon enactment. It carves out an exception: stock issued to employees earning over $1 million per year (or to high-paid service providers) is exempt from the tax, meaning buybacks tied to executive compensation packages face a lower effective tax rate.
Why we flagged it
The bill's core mechanism is a straightforward excise tax rate increase (1% to 4%) on stock repurchases, a revenue-raising measure. However, the exception for stock issued to high-paid employees and service providers creates a targeted loophole that undermines the stated accountability purpose, making the true character a tax increase with a built-in escape hatch for executive compensation.
What the text implies
- The $1M compensation threshold for the employee exception is indexed to no inflation adjustment, meaning over time it will capture a broader swath of mid-to-senior management, progressively eroding the tax base.
- The exception applies to 'remuneration' broadly defined under IRC §162(4), which includes deferred compensation, restricted stock units, and other equity instruments—allowing corporations to structure buybacks as compensation and avoid the 4% tax entirely.
The full analysis lists 4 implications of this text.
Who stands to gain
U.S. Treasury (excise tax revenue); Corporations that structure buybacks as employee compensation (tax avoidance); High-paid executives and service providers (exemption from tax on equity grants)