HR-8816-119
Referred to the House Committee on Ways and Means.
What it does
This bill would amend the Internal Revenue Code to exclude "qualified strike benefits" from a worker's gross income for federal tax purposes. Qualified strike benefits are payments made by a tax-exempt labor union (under IRC §501(c)(5)) to its members to replace wages lost during a strike, lockout, or work stoppage covered by the National Labor Relations Act or the Railway Labor Act. The exclusion would apply to compensation received after December 31, 2026. The bill also ensures that excluded strike benefits are not counted against a worker's eligibility for the Earned Income Tax Credit.
Who benefits
Union members who receive strike pay during labor disputes — estimated at hundreds of thousands of workers in any given year, though the number varies widely depending on strike activity. Workers in heavily unionized industries such as manufacturing, transportation, healthcare, and education would be most directly affected. Lower-income union members who currently owe federal income tax on strike benefits would see the largest proportional benefit. Workers who qualify for the Earned Income Tax Credit would benefit from the provision ensuring strike pay does not reduce their EITC eligibility. Tax preparers and union administrators may see reduced complexity in reporting obligations.
Who is hurt
The federal government would collect less income tax revenue, reducing funds available for other federal programs — a cost ultimately borne by all taxpayers or offset through other means. Non-union workers who receive unemployment benefits or other wage-replacement payments during work stoppages would not receive the same tax exclusion, creating an asymmetry. Workers in right-to-work states or non-unionized industries receive no benefit. Small businesses and employers involved in labor disputes may face indirect costs if the tax exclusion extends the financial endurance of striking workers, potentially prolonging work stoppages.
Supporters argue
Supporters argue that strike benefits are fundamentally different from ordinary income — they are emergency payments replacing wages workers are legally entitled to withhold as part of collective bargaining, not compensation for services rendered. They contend that taxing these payments undermines workers' ability to exercise their federally protected right to strike under the NLRA, effectively penalizing a lawful labor activity. They further argue that strike funds are modest — union strike pay typically ranges from $100 to $500 per week — and that taxing them imposes a disproportionate burden on lower-income workers who can least afford it during a period of lost wages.
Opponents argue
Opponents argue that strike benefits are a form of income like any other wage replacement — unemployment insurance, for example, is taxable — and that creating a special tax exclusion for union members introduces an inequity in the tax code that favors one class of workers over another. They contend that the exclusion would reduce federal revenue without a clear public benefit that justifies the preferential treatment, and that it could indirectly subsidize prolonged labor disputes by reducing the financial cost of striking, potentially harming businesses, consumers, and the broader economy. They may also argue that tax policy is not the appropriate tool for resolving labor relations questions.