Tax Cut for Striking Workers Act of 2025
The Tax Cut for Striking Workers Act of 2025 would make strike-related payments that unions provide to their members tax-free. Specifically, it would add a new section (139M) to exclude "qualified strike benefits" from a person’s gross income. These benefits are payments from a labor organization (a union) that is exempt under 501(a) and described in 501(c)(5), given to a member as a replacement for wages the member did not earn because of a strike, lockout, or work stoppage tied to a labor dispute (as defined by the NLRA or the Railway Labor Act). The bill also adjusts the Earned Income Tax Credit (EITC) rules to account for these benefits, adds the new section to the table of sections, and makes the exclusion effective for compensation received after December 31, 2025. In short, if you’re a union member who loses wages due to a strike or related stoppage and you receive replacement pay from your union, that pay would not be subject to federal income tax.
Key Points
- 1Exclusion from gross income: Qualified strike benefits are not treated as taxable income for the recipient.
- 2Who qualifies: Benefits must be provided by a labor organization described in section 501(c)(5) and exempt under 501(a) to a member, as a replacement for wages not received due to a strike/lockout or work stoppage (NLRA) or under the Railway Labor Act (RLA).
- 3EITC treatment: The bill updates the EITC rules to recognize these benefits (it amends 32(c)(2)(B)(vi) to include 139M), affecting how such benefits interact with the earned income credit.
- 4Administrative changes: The bill adds a new Sec. 139M to the tax code and makes a clerical amendment to the table of sections to reflect this new provision.
- 5Effective date: The tax exclusion applies to compensation received after December 31, 2025.