H.R. 5561: Picket Line Protection Act of 2025

The Picket Line Protection Act of 2025 is a proposed piece of legislation that aims to amend the Internal Revenue Code of 1986 regarding the taxation of certain compensation received by members of labor organizations during strikes. Here are the key points of the bill:

Purpose of the Bill

This bill seeks to ensure that compensation received by union members for lost wages due to a strike is not counted as taxable income. Specifically, it addresses the situation where members of labor organizations, recognized under section 501(c)(5), receive payments as a substitute for wages they would have earned if they were not striking.

Details of the Amendment

• Exclusion from Gross Income: The bill proposes a new section to be added to the tax code, stating that the compensation provided to union members as strike benefits will be excluded from their gross income.
• Compensation Definition: The bill targets compensation as replacements for wages lost due to strike actions. This means that if a worker is not receiving their normal salary because of a strike, any financial support they receive from their union or labor organization will not be taxable.
• Clerical Changes: The bill includes a clerical amendment to the tax code, ensuring that the new provisions are properly referenced within the overall structure of the tax regulations.
• Effective Date: If enacted, the changes will apply to compensation received after January 1, 2025.

Impact on Taxation

Under current law, union members may have to report any strike benefits they receive as part of their taxable income, which could lead to a significant financial burden depending on the duration of the strike. The proposed legislation intends to alleviate this burden by allowing these benefits to be treated as non-taxable income.

General Context

The bill is part of a broader legislative effort to support workers and labor organizations, particularly during times of labor disputes when workers are not receiving their regular wages. By ensuring that strike benefits are not taxed, the bill aims to provide financial relief to workers engaged in strikes.

Relevant Companies

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