# The SHARE Plan Act: What It Means for Workers and Companies

The SHARE Plan Act creates a new tax incentive for large corporations that share company ownership with their employees. Specifically, companies that distribute stock to workers would get a 3 percentage point reduction in their federal corporate tax rate—meaning if the current rate is 21%, they'd pay 18% instead. The company also gets to deduct the value of the stock it gives to employees, similar to how it deducts other business expenses. In exchange for these tax breaks, companies must meet specific requirements about how they distribute stock and who gets it.

To qualify for this tax break, a company needs to have at least 500 full-time U.S. employees and be based in the United States. The company must either have given at least 5% of its outstanding stock to employees over time, or distribute at least 1% of its stock to workers in a single year. The stock distributions must follow strict rules: they have to go to regular employees (not just executives), be given equally to participating workers, and vest over a period of up to five years. Importantly, employees can't be charged for the stock—it's a free benefit. Once the stock vests, workers can sell it whenever they want without restrictions.

For employees, the bill offers a significant tax advantage. When workers receive stock under a qualifying SHARE plan, they don't have to pay income tax on that stock when they receive it. This is different from most other forms of compensation, where you'd owe taxes immediately. The tax benefit applies to the fair market value of the stock on the day it's distributed. Additionally, the bill includes a safeguard: no employee can receive more than $250,000 worth of stock per year under the plan (this amount adjusts annually for wage growth), which prevents the benefit from being concentrated among a few highly paid workers.

The law also includes protections for private companies. If a company's stock isn't publicly traded, it must conduct a professional valuation of the company and give employees real opportunities to sell their shares at fair market value during the year. This ensures that workers in private companies can actually convert their stock into cash if they need to, rather than being stuck holding illiquid shares. The bill takes effect more than a year after it's signed into law, giving companies time to set up their plans.