I 
119TH CONGRESS 
1ST SESSION H. R. 3105 
To amend the Internal Revenue Code of 1986 and the Small Business 
Act to expand the availability of employee stock ownership plans in 
S corporations, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 30, 2025 
Mr. KELLY of Pennsylvania (for himself, Mr. PANETTA, Mr. ESTES, Mr. 
SCHNEIDER, Mrs. MILLER of West Virginia, Mr. DAVIS of Illinois, Mr. 
MOORE of Utah, and Ms. SEWELL) introduced the following bill; which 
was referred to the Committee on Ways and Means, and in addition to 
the Committees on Small Business, and Education and Workforce, for a 
period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the com-
mittee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 and the Small 
Business Act to expand the availability of employee stock 
ownership plans in S corporations, and for other pur-
poses. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Promotion and Expan-
sion of Private Employee Ownership Act of 2025’’. 
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SEC. 2. FINDINGS. 
Congress finds that— 
(1) on January 1, 1998—nearly 25 years after 
the Employee Retirement Income Security Act of 
1974 was enacted and the employee stock ownership 
plan (hereafter in this section referred to as an 
‘‘ESOP’’) was created—employees were first per-
mitted to be owners of subchapter S corporations 
pursuant to the Small Business Job Protection Act 
of 1996 (Public Law 104–188); 
(2) with the passage of the Taxpayer Relief Act 
of 1997 (Public Law 105–34), Congress designed in-
centives to encourage businesses to become ESOP- 
owned S corporations; 
(3) since that time, several thousand companies 
have become ESOP-owned S corporations, creating 
an ownership interest for several million Americans 
in companies in every State in the country, in indus-
tries ranging from heavy manufacturing to construc-
tion to services; 
(4) while estimates show that 40 percent of 
working Americans have no formal retirement ac-
count at all, every United States worker who is an 
employee-owner of an S corporation company 
through an ESOP has a valuable qualified retire-
ment savings account; 
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(5) recent studies have shown that employees of 
ESOP-owned S corporations enjoy greater job sta-
bility than employees of comparable companies; 
(6) studies also show that employee-owners of S 
corporation ESOP companies have amassed mean-
ingful retirement savings through their S ESOP ac-
counts that will give them the means to retire with 
dignity; 
(7) under the Small Business Act (15 U.S.C. 
631 et seq.) and the regulations promulgated by the 
Administrator of the Small Business Administration, 
a small business concern that was eligible under the 
Small Business Act for the numerous preferences of 
the Act is denied treatment as a small business con-
cern after an ESOP acquires more than 49 percent 
of the business, even if the number of employees, the 
revenue of the small business concern, and the ra-
cial, gender, or other criteria used under the Act to 
determine whether the small business concern is eli-
gible for benefits under the Act remain the same, 
solely because of the acquisition by the ESOP; and 
(8) it is the goal of Congress to both preserve 
and foster employee ownership of S corporations 
through ESOPs. 
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