United States 119th Congress Status: In Committee Bipartisan · 14 D · 1 I cosponsors

S 445 — Carried Interest Fairness Act of 2025

Last action — Read twice and referred to the Committee on Finance.

  1. ✓
    Introduced
  2. 2
    In Committee
  3. 3
    Passed Senate
  4. 4
    Passed House
  5. 5
    To Executive
  6. 6
    Enacted

This bill is in committee in the Senate. Introduced February 06, 2025. It must pass committee before a floor vote.

Next likely step: a committee vote, then a floor vote in the Senate.

Odds of enactment

Low chance

Based on the sponsor, cosponsors, and committee posture, this bill has a low chance of becoming law.

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A statistical estimate from our own model of past outcomes — an insight, not a guarantee. Policymaking is volatile.

Prognosis

Advancing 42% · moderate confidence

  • In Committee

    Current position in the legislative process.

  • 15 sponsors

    1 primary, 14 co-sponsors signed on.

  • Bipartisan support

    Sponsored across 2 parties (14 D · 1 I) — cross-party backing.

Based on stage, sponsorship breadth, committee status, recorded votes, and cross-state momentum — a description of the observable signals, not a prediction.

In plain language

This bill changes the tax treatment of carried interest to ordinary income rates.

The Carried Interest Fairness Act of 2025 reclassifies income from carried interest as ordinary income, subjecting it to higher tax rates. It also applies self-employment taxes to this income and introduces specific rules for partners providing investment management services.

What this means for you
  • Workers: If you work as a partner in investment management, your carried interest may be taxed at a higher rate.
  • Consumers: Changes in tax treatment may impact the financial services industry, potentially affecting costs and services.

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.

Bill Text

Action History

  1. Introduced in Senate

  2. Read twice and referred to the Committee on Finance.

Sponsors

Sponsorship breakdown

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1 sponsors · 14 co-sponsors · 532 not signed on

Sponsors (1)

Co-sponsors (14)

Not signed on (532)

532 members have not signed on to this bill.

Show all 532 →

"Not signed on" means a member has not sponsored or co-sponsored this bill — it does not imply opposition. Members flagged Voted No have a recorded No vote on this bill.

Whip count is in markup. Polling the chamber and every recorded vote this session. Only the first open is slow. It’s instant for you after this. Calling the roll · Tallying · Engrossing

Subjects

taxation
Cross-referencing the record. Reading this bill against every other bill in the corpus by meaning, not keywords. Only the first open is slow. It’s instant for you after this. Matching · Ranking · Engrossing

Frequently asked questions

What does S 445 do?
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.
Who sponsors S 445?
S 445 is sponsored by Baldwin, Tammy (Democratic), Van Hollen, Chris (Democratic), Murray, Patty (Democratic), Schatz, Brian (Democratic), Markey, Edward J. (Democratic), Klobuchar, Amy (Democratic), Kaine, Tim (Democratic), Merkley, Jeff (Democratic), Reed, Jack (Democratic), Hirono, Mazie K. (Democratic), Warren, Elizabeth (Democratic), Sanders, Bernard (Independent), Booker, Cory A. (Democratic), Welch, Peter (Democratic), and Luján, Ben Ray (Democratic).
What is the current status of S 445?
This bill is in committee in the Senate. Introduced February 06, 2025. It must pass committee before a floor vote.
Where can I track S 445?
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