Promotion and Expansion of Private Employee Ownership Act of 2025

The "Promotion and Expansion of Private Employee Ownership Act of 2025" aims to significantly increase employee ownership in S corporations by addressing current barriers and providing new support mechanisms. It recognizes the vital role of Employee Stock Ownership Plans (ESOPs) in providing retirement savings and job stability for millions of Americans, seeking to preserve and foster this model. A key provision of the bill accelerates and expands the tax deferral for certain sales of employer stock to S corporation ESOPs by amending the Internal Revenue Code and repealing previous limitations, making transitions to employee ownership more financially attractive. This encourages more businesses to adopt ESOP structures. The legislation also amends the Small Business Act to ensure that businesses do not lose their small business concern status solely because an ESOP acquires over 49 percent of the company. It mandates that each ESOP participant be treated as directly owning their proportionate share of stock for eligibility, removing a significant disincentive for ESOP formation. To provide direct support, the bill establishes the S Corporation Employee Ownership Assistance Office within the Department of the Treasury for education and technical assistance. It also creates an Advocate for Employee Ownership within the Department of Labor, tasked with acting as a liaison, providing public education, and recommending legislative changes to further promote employee ownership.