Holiday Bonus Tax Relief Act of 2025
Summary
The Holiday Bonus Tax Relief Act of 2025 proposes to amend the Internal Revenue Code of 1986 by excluding holiday bonuses from gross income, up to $2,500, with adjustments for inflation after 2026. This exclusion applies to bonuses paid in January, November, or December. The bill also requires employers to report the total amount of qualified holiday bonuses on W-2 forms.
Expected Effects
If enacted, this act would reduce the tax burden on individuals receiving holiday bonuses, potentially increasing their disposable income during the holiday season. It would also create a new reporting requirement for employers related to these bonuses.
Potential Benefits
- Increased disposable income for individuals receiving holiday bonuses.
- Simplification of tax calculations for some individuals.
- Potential incentive for employers to offer holiday bonuses.
- Could stimulate consumer spending during the holiday season.
- Provides a modest tax break for middle and lower-income individuals who receive bonuses.
Most Benefited Areas:
Potential Disadvantages
- Potential reduction in federal tax revenue.
- Increased complexity for employers in tracking and reporting holiday bonuses.
- The benefit is capped at $2,500, limiting the impact for higher-income earners.
- May disproportionately benefit employees in certain industries or sectors that commonly offer holiday bonuses.
- Could be perceived as a temporary or insufficient measure to address broader tax issues.
Most Disadvantaged Areas:
Constitutional Alignment
The bill aligns with the general welfare clause of the Constitution (Preamble), as it aims to improve the financial well-being of some citizens. Article I, Section 8 grants Congress the power to lay and collect taxes, and this bill represents an adjustment to the tax code, which falls under that power. The bill does not appear to infringe upon any specific constitutional rights or limitations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).