Article
Final regulations issued on stock repurchase excise tax
March 18, 2026 · Authored by Meghan Andersson
On Nov. 21, 2025, the IRS issued final regulations (T.D. 10037) on the computation and application of the 1% stock repurchase excise tax. The final regulations adopt the proposed regulations that were released on April 12, 2024 (REG-115710-22), with some significant modifications.
These modifications, discussed below, narrow the applicability of the excise tax compared to prior guidance. As a result, certain transactions that were previously treated as “repurchases” subject to the excise tax are now no longer taxable. Thus, taxpayers who paid the excise tax based on prior guidance may be entitled to a refund.
Effective date
The final regulations are effective as of Nov. 24, 2025, and apply to repurchases made after Dec. 31, 2022.
Background
The excise tax was enacted as part of the Inflation Reduction Act of 2022 (P.L. 117-169) and is codified in section 4501. Final procedural regulations (T.D. 10002) on the reporting and payment of the tax were issued on June 28, 2024.
The excise tax generally applies when a covered person (i.e., a publicly traded domestic corporation) repurchases its stock or when its stock is acquired by a “specified affiliate” (i.e., a domestic subsidiary). In addition, the tax can apply when a specified affiliate repurchases stock of a publicly traded foreign corporation.
The definition of “stock” for purposes of these rules includes non-publicly traded stock, such as certain preferred stock.
The term “repurchase” means a redemption under IRC section 317(b) or an “economically similar transaction.” Thus, a repurchase includes, but is not limited to, stock exchanged in certain transactions under section 355 and section 368.
The 1% excise tax applies to the “stock repurchase excise tax base,” which is the fair market value of all stock repurchases during the year, less the fair market value of stock that meets a statutory exception and the fair market value of certain stock issuances during the year. Under a de minimis exception, the excise tax does not apply if the total value of stock repurchased during the taxable year does not exceed $1 million (before reductions).
Related sections
Stock buyback tax - Final procedural regulations released
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.