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The buyback excise tax
Since the start of 2023, an American company that buys back its own shares pays a tax on it. One percent. The idea sounds significant, because one percent of a very large number is a large number, and buybacks are a very large number. In practice it has turned out to be one of the smallest taxes anybody argues about this much.
This page walks through what the tax actually is, what it costs companies in real terms, what happened to buyback volumes after it arrived, and where the final regulations landed. I built it because of the gap between the framing and the arithmetic. A one percent tax on buybacks isn't one percent of buybacks, because it applies to repurchases net of the shares a company issues in the same year, and once you measure the drag on earnings you end up somewhere nearer four tenths of one percent.
There's also a hole here I'd rather point at than fill. The revenue figure everyone quotes for this tax is a forecast made before the tax existed. Nobody has published what it actually collected. Where something couldn't be verified, the page says so instead of rounding it into a fact. Sources and dates are at the bottom, and the regulations themselves are linked, which is unusual and worth taking advantage of.
The United States has taxed net share repurchases at 1% since 1 January 2023. It did not stop anything: S&P 500 buybacks set a record $942.5 billion in 2024 and a record rolling twelve month $1.020 trillion to September 2025, both above the pre tax 2022 record. S&P Dow Jones Indices measures the actual drag at 0.36% to 0.44% of operating earnings, not 1%, because the tax applies to repurchases net of issuance. The proposed increase to 4% was never enacted, and the final regulations published in November 2025 narrowed the tax rather than widening it. Nobody has published how much it has actually raised.
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