HR 1091 119th Congress
Carried Interest Fairness Act of 2025
To amend the Internal Revenue Code of 1986 to provide for the proper tax treatment of personal service income earned in pass-thru entities.
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Introduced
Introduced in the House.
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Referred to the House Committee on Ways and Means.
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Introduced in House
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Introduced in House
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Introduced in House
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| Date and time | Record | Official detail | Source |
|---|---|---|---|
| IntroductionIntroduced | Introduced in the House. | Congress.gov | |
| Official actionReferred to the House Committee on Ways and Means. | No additional detail supplied.IntroReferral · House floor actions · Code H11100 | Congress.gov | |
| Official actionIntroduced in House | No additional detail supplied.IntroReferral · Library of Congress · Code Intro-H | Congress.gov | |
| Official actionIntroduced in House | No additional detail supplied.IntroReferral · Library of Congress · Code 1000 | Congress.gov | |
| Text versionIntroduced in House | A dated text-version record is available. | Congress.gov |
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Congressional Research Service
CRS summary
Carried Interest Fairness Act of 2025This 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.
Official documents
Text versions
- Introduced in HouseFeb 6, 2025