Publicly traded corporations are limited to a $1 million deduction for covered employees. Originally established in 1993, the Tax Cuts and Jobs Act (TCJA) of 2017 made significant changes to the $1 million compensation deduction limit for publicly traded corporations, including eliminating the performance-based exception. The One Big Beautiful Bill Act adds an entity aggregation rule for tax years beginning after 2025. Legislation in 2021 expanded the definition of a covered employee to take effect in tax years beginning after 2026.

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