Tax Cut for Striking Workers Act of 2025
The Tax Cut for Striking Workers Act of 2025 would create a new tax provision (Section 139M) that excludes qualified strike benefits from an individual’s gross income. Qualified strike benefits are payments made by a labor organization described in 501(c)(5) (unions) to a member, provided as a wage replacement for wages lost due to a strike, lockout, or work stoppage arising from a labor dispute (as defined by the National Labor Relations Act) or a Railway Labor Act work stoppage. The bill also adjusts the Earned Income Tax Credit (EITC) rules to reference the new section, and includes a clerical amendment to insert the new section into the proper place in the Internal Revenue Code. The changes would apply to compensation received after December 31, 2025 (i.e., starting with the 2026 tax year). In short, the bill aims to make strike-related wage-replacement benefits tax-free at the federal level. Sponsors include a group of Democratic and allied Senators led by Mr. Gallego, with co-sponsors listed in the bill text. The bill is introduced in the Senate and referred to the Committee on Finance.
Key Points
- 1New tax exclusion: Creates Section 139M to exclude “qualified strike benefits” from gross income.
- 2What counts as qualified strike benefits: Compensation paid by a 501(c)(5) labor organization to a member, as wage replacement for pay lost due to a strike, lockout, or work stoppage from a labor dispute (NLRA) or RLA-related stoppage.
- 3Scope of exclusion: Applies to federal income tax; it does not address other taxes (e.g., payroll taxes) unless otherwise stated in the bill.
- 4EITC adjustment: Amends the EITC rules (section 32(c)(2)(B)(vi)) to reference 139M, signaling that the new exclusion is recognized in calculations related to the EITC.
- 5Effective date: Applies to compensation received after December 31, 2025 (tax year 2026 and later).