Carried Interest Fairness Act of 2025
Latest action. Read twice and referred to the Committee on Finance.
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.
Written by analysts at the Congressional Research Service and published on Congress.gov, not by Civibrief. Summarized at the "Introduced in Senate" stage on February 6, 2025. It describes the bill, it is not the legal text.
Where is it in the process, and what happens next?
4 steps remain before this bill could become law.
The record's latest action, on February 6, 2025: Read twice and referred to the Committee on Finance.
- Clearing the committees it was referred to, and being scheduled for a floor vote
- Passage by the Senate
- Passage by the House
- The President's signature. If the President vetoes it, two-thirds of both chambers must vote to override.
How likely is it to become law?
Civibrief does not forecast outcomes and this page has no opinion about this one. What the record supports is a base rate, which is a fact about the whole pile, not a prediction about this measure.
In the 118th Congress (2023-24), 274 of the 16,565 bills and joint resolutions introduced became law, about 1.7 percent. That count covers every measure at every stage, including the many that never left committee.
This one is not there yet: 4 steps are still outstanding, listed above.
Has anyone actually voted on it?
No. No roll call in this Congress cites this measure. That is the ordinary outcome: most measures never reach a recorded floor vote, and a committee ends most of them simply by not acting.
A vote is not the only thing that happens to a measure. Hearings, markups, and referrals are all recorded actions, and none of them is a vote of the full chamber.
Who is behind it?
Tammy Baldwin (D-WI) introduced it on February 6, 2025, and 14 members have since signed on as cosponsors.
They are 13 Democrats, 1 independent.
Cosponsoring is a formal signature on the text. It is not a commitment to vote for the measure, it does not bind anyone's party, and a long list of cosponsors is a measure of attention rather than of prospects.
How long has it been in play?
It was introduced on February 6, 2025, 627 days ago. The most recent recorded action was 627 days ago, on February 6, 2025.
Measures do not carry over. Anything the 119th Congress has not finished by January 3, 2027 dies when the term ends, and has to be introduced again from the start in the next Congress.
Every answer above is assembled from this measure's own record on Congress.gov and from published counts of what Congress has passed before. Civibrief does not predict outcomes and takes no position on any measure.
Vote history
- SenateIn committee, no floor vote yet
- HouseAwaits Senate passage
- PresidentAwaits both chambers