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S. 445: Carried Interest Fairness Act of 2025
119th Congress · introduced 2025-02-06 · Taxation · Latest: Read twice and referred to the Committee on Finance.
federal
Official title
Carried Interest Fairness Act of 2025
Plain 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.
Congressional Research Service summary (Introduced in Senate), quoted unchanged (nonpartisan). Read the source.
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Official text
Carried Interest Fairness Act of 2025
Source: Congressional Research Service summary (Introduced in Senate)
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Officials and money
Sponsor: Sen. Baldwin, Tammy [D-WI] · 14 cosponsors
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Words on this page, explained (2)
- Bill
- A proposed law. It becomes law only if it passes the legislature and is signed by the president or governor (or a veto is overridden).
- Capital gains
- The profit from selling something you own, such as stock or real estate, for more than you paid. A capital gains tax is a tax on that profit.
Plain meanings written from linked sources. All words.
Sources
- Congressional Research Service summary (Introduced in Senate)
- Congress.gov
- Data: GovInfo BILLSTATUS bulk data (Library of Congress), BILLSTATUS-119s445.xml <https://www.govinfo.gov/bulkdata/BILLSTATUS/119/s>
Record fed-us-cong119-s445 · catalog fed-us-congress-bills-cong119 · updated 2026-11-03 by psicol fed-bills