Promotion and Expansion of Private Employee Ownership Act of 2025

This bill, titled the "Promotion and Expansion of Private Employee Ownership Act of 2025," seeks to expand the availability and benefits of employee stock ownership plans (ESOPs) in S corporations. It amends the Internal Revenue Code of 1986 to accelerate the full deferral of tax for certain sales of employer stock to S corporation ESOPs, moving the effective date to the bill's enactment. Additionally, it repeals a limitation under Section 1042 of the Internal Revenue Code related to such sales, applying this change to sales occurring after the bill's enactment. A significant provision addresses the Small Business Act, ensuring that a business concern remains eligible as a small business even after an ESOP acquires more than 49 percent of its ownership. This is achieved by treating each ESOP participant as directly owning their proportionate share of the stock for eligibility purposes. To further support employee ownership, the bill mandates the establishment of the S Corporation Employee Ownership Assistance Office within the Department of the Treasury, which will provide education, outreach, and technical assistance to S corporations interested in sponsoring ESOPs. The bill also creates the position of an Advocate for Employee Ownership within the Department of Labor's Employee Ownership Initiative. This Advocate will serve as a liaison, provide public education and assistance, help resolve disputes with the Department of Labor, and recommend legislative and administrative changes to promote employee ownership. The Advocate will also coordinate with other federal agencies and submit annual reports on activities and recommendations to Congress.