S. 5661: To amend the Internal Revenue Code of 1986 to provide parity in the taxation of professional sports franchises under the limitation on the deduction for certain employee remuneration, and for other purposes.

This bill would change a tax rule that limits how much a company can deduct for very high executive pay.

What the bill changes

Under current law, publicly traded companies generally cannot deduct more than $1 million in pay for certain top employees. The bill would revise that rule so that professional sports franchises would not count employees who perform services in athletics when identifying the group of top-paid employees subject to the deduction limit.

In plain terms, this means pay for certain people working in the athletic side of a professional sports franchise would be treated differently for this tax limit than pay for other high-paid employees.

Who it would affect

The main entities affected would be professional sports franchises that are subject to federal corporate income tax rules. The bill is focused on how those teams and related franchise operations calculate deductions for employee compensation.

When it would take effect

The change would apply to taxable years beginning after December 31, 2026.

Relevant Companies

None found