Bill > S2026

This bill introduces a new definition and tax provision related to executive compensation for financial institutions and publicly held corporations in Massachusetts. Specifically, the bill defines a "compensation ratio" as the comparison between the highest-paid executive's compensation and the median employee compensation, calculated annually. For taxable years beginning January 1, 2027, corporations with a compensation ratio exceeding 100 (meaning the top executive earns more than 100 times the median employee salary) will face an additional 2% tax on their net income. This means that companies with extremely high executive-to-worker pay disparities will be subject to a financial penalty, potentially incentivizing more equitable compensation structures. The bill applies to both financial institutions and publicly held corporations, targeting companies with significant pay inequalities by using a tax mechanism to discourage excessive executive compensation.

Budget and Finance

https://malegislature.gov/Bills/194/S2026