The Inflation Reduction Act added a 1% excise tax on stock buybacks by publicly traded corporations under IRC § 4501. It is computed on Form 7208 and reported on Form 720 as IRS No. 150. EasyFile720 handles the netting rule, the exceptions, and the e-file.
The stock repurchase excise tax is a 1% tax under IRC § 4501, created by the Inflation Reduction Act of 2022, on the fair market value of stock that a covered corporation buys back during its tax year. It applies to repurchases after December 31, 2022, is computed on Form 7208, and is reported on Form 720 as IRS No. 150. A netting rule and a $1 million de minimis threshold mean many corporations owe far less than 1% of gross buybacks — or nothing at all.
The Inflation Reduction Act of 2022 created a new excise tax under IRC § 4501 equal to 1% of the fair market value of stock a covered corporation repurchases during its tax year. It applies to repurchases after December 31, 2022.
Any domestic corporation whose stock is traded on an established securities market — plus certain U.S. affiliates of publicly traded foreign parents. Privately held companies are generally not covered.
You don't pay on gross buybacks. Repurchases are reduced by the value of stock issued or provided to employees and contributed to retirement plans during the same year before the 1% is applied.
The tax is computed on Form 7208 and reported on Form 720 as IRS No. 150, attached to the return for the first full quarter after your tax year ends — for a calendar-year corporation, the Q1 return due April 30.
You don't pay 1% on gross buybacks. Form 7208 builds a net base: repurchases minus employee issuances, retirement-plan contributions, and statutory exceptions. The 1% applies to what's left.
| Component | Treatment | Form 7208 |
|---|---|---|
| Stock repurchased during the year (FMV) | Added to the base | Part I |
| Stock issued or provided to employees for services | Subtracted | Part IV |
| Stock contributed to employer retirement / ESOP plans | Subtracted | Part III |
| Statutory exceptions (reorganizations, dividends, RIC/REIT…) | Subtracted | Part II |
| Net repurchase base × 1% | Excise tax (IRS No. 150) | Line 11 |
Source: IRS Instructions for Form 7208. The tax equals 1% of the net repurchase base (Form 7208, line 10 × 1% = line 11), carried to IRS No. 150 on Form 720.
During 2025 a covered corporation repurchases $50,000,000 of its stock. In the same year it issues $8,000,000 of stock to employees and contributes $2,000,000 of stock to its 401(k).
Net base: $50,000,000 − $8,000,000 − $2,000,000 = $40,000,000. Excise tax: $40,000,000 × 1% = $400,000 — reported on Form 720, IRS No. 150, via Form 7208 on the Q1 2026 return (due April 30, 2026).
De minimis: a corporation that repurchased only $900,000 for the year (≤ $1M) would owe $0.
Not every buyback is taxed. A dollar threshold and several statutory carve-outs can lower or eliminate what you owe — confirm specifics against § 4501(e) and the Form 7208 instructions.
If the total fair market value of stock repurchased during the tax year is $1,000,000 or less, no stock repurchase excise tax is due. You may still complete Part I and attach Form 7208, but the tax is $0.
Repurchases are excluded from the base when they are part of a tax-free reorganization, treated as a dividend, made by a regulated investment company (RIC) or REIT, or when the stock is contributed to an ESOP or retirement plan. Securities dealers acting in the ordinary course also qualify for relief.
Compute on Form 7208, apply the netting rule and exceptions, report under IRS No. 150, and file with the correct quarter's Form 720 — EasyFile720 manages all of it.
Confirm you are a covered corporation
Verify your stock trades on an established securities market (or that you are a covered U.S. affiliate of a publicly traded foreign parent), and gather every repurchase and economically similar transaction for the tax year.
Total repurchases and apply the netting rule
Enter the FMV of stock repurchased (Part I), then subtract stock issued or provided to employees (Part IV) and contributions to retirement/ESOP plans (Part III). EasyFile720 walks you through each part of Form 7208.
Apply exceptions and the $1M de minimis
Remove statutory exceptions under § 4501(e) (Part II). If total repurchases for the year are $1,000,000 or less, the tax is zero. EasyFile720 flags de minimis and each exception automatically.
Carry to Form 720 (IRS No. 150) & e-file
The 1% tax on your net base carries to Form 720 as IRS No. 150. EasyFile720 attaches Form 7208, files the return for the correct quarter after your tax-year close, and e-files directly to the IRS.
It is a 1% federal excise tax on the fair market value of stock that a "covered corporation" repurchases during its tax year, created by the Inflation Reduction Act of 2022 under IRC § 4501. The tax is figured on Form 7208 and reported on Form 720 as IRS No. 150. It applies to repurchases occurring after December 31, 2022.
No. The tax applies to a net base. You start with the fair market value of stock repurchased during the year, then subtract the value of stock issued or provided to employees for services, contributions of stock to employer retirement/ESOP plans, and statutory exceptions under § 4501(e). The 1% rate is applied to that net amount. This "netting rule" means active employee-equity programs can meaningfully reduce the tax.
A covered corporation is any domestic corporation whose stock is traded on an established securities market, plus certain U.S. affiliates of publicly traded foreign corporations. Privately held companies that are not traded on an established securities market are generally not subject to the tax.
Yes. There is a $1,000,000 de minimis exception: if the total fair market value of stock repurchased during the tax year is $1 million or less, no stock repurchase excise tax is due. A corporation buying back $900,000 of stock in the year owes $0.
The stock repurchase excise tax is reported once per year. Form 7208 is attached to the Form 720 for the first full quarter after the close of your tax year. For a calendar-year corporation (tax year ending December 31), that is the first-quarter Form 720, due April 30. Fiscal-year filers report on the quarter that falls after their year-end.
IRS No. 150 is the line on Form 720, Part II for "Repurchase of corporate stock." You compute the tax on Form 7208 (Parts I–IV), carry the 1% result to line 11 of Form 7208 and onto IRS No. 150 of Form 720, and file Form 7208 as an attachment to that Form 720. EasyFile720 handles the worksheet and the attachment.
Every rate and rule on this page comes straight from IRS guidance. Confirm the details yourself:
This page is general information, not tax advice. The stock repurchase excise tax (IRC § 4501) carries detailed netting, exception, and covered-corporation rules — confirm your specific facts in the Form 7208 instructions and regulations before filing.
The 1% § 4501 tax via Form 7208 and IRS No. 150 — netting rule and exceptions handled. Free to get started, pay only when you file.