Carried Interest Fairness Act of 2025

Summary

Carried Interest Fairness Act of 2025 This bill taxes income from carried interest at ordinary income tax rates and makes other changes related to carried interest. (Some exceptions apply.) As background, a general partner in a private equity firm or hedge fund (typically structured as a partnership) generally receives a share of the profits from the assets managed by the general partner (known as carried interest). Under current law, carried interest is characterized (for federal tax purposes) as an interest in a partnership’s capital and, thus, taxed at capital gains tax rates (which may be lower than the applicable ordinary income tax rates).  Under the bill, net capital gain and loss attributable to carried interest is recharacterized as ordinary income and loss and, thus, taxed at ordinary income tax rates. (Some exceptions apply.) The bill also treats as ordinary the money (or fair market value of property) received by a partner in a sale or exchange of carried interest. (Thus, the bill extends what is known as the hot asset rule to include carried interest.) Further, the bill deems distributions of carried interest by a partnership in exchange for interest in other partnership property a sale or exchange of such property and, thus, requires the partner to recognize ordinary gain on the distributed carried interest. Finally, the bill imposes self-employment taxes on carried interest income.

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Timeline

1. 6 February 2025

   Introduced

   Referred to the House Committee on Ways and Means.

   Source: IntroReferral

2. 6 February 2025

   Introduced

   Introduced in House

   Source: IntroReferral

3. 6 February 2025

   Introduced

   Introduced in House

   Source: IntroReferral

Votes

No vote records are attached yet.

Versions

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Documents

2 official files

• Introduced in House

  Introduced in House · EN · 6 February 2025

  DownloadOpen at official source

• Introduced in House

  summary · EN · 6 February 2025

  Open at official source

Sponsors

• Rep. Perez, Marie Gluesenkamp [D-WA-3] · D · Sponsor
• Rep. Beyer, Donald S. [D-VA-8] · D · Sponsor
• Rep. Lofgren, Zoe [D-CA-18] · D · Cosponsor
• · hswm00 · Standing

Related records

• related to ← Carried Interest Fairness Act of 2025
• related to ← REAL AMERICA Act
• related to ← Small Business Tax Relief Act