S-5127-119
Read twice and referred to the Committee on Finance.
Sponsored by Jim Banks (R-IN)
What it does
This bill would exclude from federal taxable income any compensation or expense reimbursement paid to a person (or their dependent) for participating in an approved clinical trial. It would also require that such payments not be counted as income or resources when determining eligibility for federal benefit programs or federally funded state/local assistance programs, effective for payments made after December 31, 2025.
Who benefits
Clinical trial participants and their families, particularly those with lower incomes who might otherwise lose eligibility for programs like Medicaid, SNAP, or Supplemental Security Income due to trial compensation counting as income. Research institutions and pharmaceutical/biotech companies may benefit indirectly through increased willingness of patients to enroll in trials. People with rare or serious diseases who rely on trials for access to experimental treatment may see fewer financial disincentives to participate.
Who is hurt
Federal and state tax revenue would decrease modestly due to the income exclusion. State and local benefit programs financed partly with federal funds may see slightly higher enrollment or benefit amounts as trial payments are excluded from eligibility calculations, marginally increasing program costs. No specific industry or demographic group bears a direct new burden.
Supporters argue
Supporters argue that taxing or counting clinical trial compensation as income discourages participation in medical research, particularly among low-income individuals who most need financial reimbursement for expenses like travel and lost wages. They contend this creates a public health benefit by increasing enrollment diversity in trials, which the FDA and NIH have long identified as a barrier to representative clinical research, without exposing participants to unfair loss of benefits like Medicaid or SNAP.
Opponents argue
Opponents argue that carving out a specific income exclusion for one narrow category of payments adds complexity to the tax code and benefit eligibility rules, and could be exploited if "reasonable and necessary expenses" is interpreted broadly to shield larger payments from taxation. They contend that targeted tax exclusions like this one erode the tax base incrementally and that similar unmet needs exist for other populations, such as caregivers or research subjects in non-clinical studies, who would not receive comparable treatment.
Constitutional context
Congress has broad authority under the Sixteenth Amendment to define what counts as taxable income, including creating exclusions like this one, and courts have historically given Congress wide latitude in structuring such exclusions. This bill raises no significant constitutional question beyond ordinary tax-code line-drawing.
Checks and balances
Congress would define the tax exclusion and eligibility rule directly in statute; the IRS and federal/state benefit agencies would implement it through regulations and guidance, with courts available to resolve interpretive disputes.
Historical precedent
Congress has previously excluded other narrow categories of payments from gross income under similar Internal Revenue Code provisions, such as certain disaster relief and combat pay exclusions, though no directly analogous clinical trial compensation exclusion has been enacted before.