119th Congress Taxation
S. 445: Carried Interest Fairness Act of 2025
Introduced
- Introduced (completed)
- Passed Senate (not reached)
- Passed House (not reached)
- To the President (not reached)
- Became law (not reached)
Summary
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.)
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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.
Written by the Congressional Research Service, Library of Congress.
Roll calls
No roll call votes have been held on this bill.
Amendments
No amendments were offered to this bill.
Cosponsors
- Cory Booker D-NJOriginal
- Mazie Hirono D-HIOriginal
- Amy Klobuchar D-MNOriginal
- Timothy Kaine D-VAOriginal
- Edward Markey D-MAOriginal
- Patty Murray D-WAOriginal
- Jeff Merkley D-OROriginal
- John Reed D-RIOriginal
- Bernard Sanders I-VTOriginal
- Brian Schatz D-HIOriginal
- Chris Van Hollen D-MDOriginal
- Peter Welch D-VTOriginal
- Elizabeth Warren D-MAOriginal
- Ben Luján D-NM
Who scored on this bill
- 1Tammy Baldwin SponsorDrew cross-party cosponsors, introduced2 events+6
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Introductions and cosponsorships count toward weekly caps and show no points.
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History
- Introduced in the Senate by Tammy Baldwin.
Show the full action history (2 actions)
- Introduced in Senate
- Read twice and referred to the Committee on Finance.