Industries

Helping clients meet their business challenges begins with an in-depth understanding of the industries in which they work. That’s why KPMG LLP established its industry-driven structure. In fact, KPMG LLP was the first of the Big Four firms to organize itself along the same industry lines as clients.

How We Work

We bring together passionate problem-solvers, innovative technologies, and full-service capabilities to create opportunity with every insight.

Learn more

Careers & Culture

What is culture? Culture is how we do things around here. It is the combination of a predominant mindset, actions (both big and small) that we all commit to every day, and the underlying processes, programs and systems supporting how work gets done.

Learn more

Proposed regulations: Limitation of deduction for certain employee remuneration under section 162(m)

Proposed regulations implement amendments made to section 162(m) by American Rescue Plan Act of 2021

Download PDF
Share
January 14, 2025

The U.S. Treasury Department and IRS today issued proposed regulations (REG-118988-22) under section 162(m), which limits the deduction for certain employee remuneration in excess of $1 million for federal income tax purposes.

The proposed regulations implement the amendments made to section 162(m) by the American Rescue Plan Act of 2021.

The proposed regulations generally are proposed to apply to compensation that is otherwise deductible for tax years beginning after the later of December 31, 2026, or the date the proposed regulations are finalized.

The proposed regulations provide:

  • For purposes of determining whether an employee is one of the five highest compensated employees as defined in new section 162(m)(3)(C), the term “employee” means an “employee” as defined in section 3401(c). In general, under section 3401(c) and the corresponding regulations, the term “employee” includes a common law employee and an officer of a corporation.
  • A covered employee by reason of section 162(m)(3)(C) includes an individual who is both one of the five highest compensated employees for the current tax year (regardless of whether the individual is employed on the last day of the tax year) and also a covered employee on the basis of being a covered employee for a preceding tax year (as provided in section 162(m)(3)(D)).
  • Any employee of any corporation in the affiliated group may be one of the five highest compensated employees of the publicly held corporation regardless of whether the employee is an employee of or performs services for the publicly held corporation, as defined in §1.162-33(c)(1)(i).

Comments on the proposed regulations and requests for a public hearing are due by March 17, 2025. 

Thank you!

Thank you for contacting KPMG. We will respond to you as soon as possible.

Contact KPMG

Use this form to submit general inquiries to KPMG. We will respond to you as soon as possible.

By submitting, you agree that KPMG LLP may process any personal information you provide pursuant to KPMG LLP's Privacy Statement.

An error occurred. Please contact customer support.

Job seekers

Visit our careers section or search our jobs database.

Submit RFP

Use the RFP submission form to detail the services KPMG can help assist you with.

Office locations

International hotline

You can confidentially report concerns to the KPMG International hotline

Press contacts

Do you need to speak with our Press Office? Here's how to get in touch.

Headline