Carried Interest Fairness Act of 2025

# Carried Interest Fairness Act of 2025 - Summary **What It Does** This bill would change how investment fund managers—particularly those in private equity, hedge funds, and similar investment firms—pay taxes on their earnings. Currently, many fund managers can treat their compensation (called "carried interest") as capital gains, which are taxed at lower rates than ordinary income. The bill would require this compensation to be taxed as ordinary income instead, resulting in higher tax bills for affected managers. **Who It Affects** The primary impact would be on investment fund managers and partners at private equity firms, hedge funds, and venture capital companies who receive carried interest as part of their compensation. Indirectly, it could affect investors in these funds if managers pass costs along.

The bill would not significantly affect average wage-earning Americans. **Key Provision & Current Status** The main provision reclassifies carried interest as ordinary income rather than capital gains, changing the tax rate applied to this compensation. As of now, the bill remains in committee, meaning it has been introduced but has not yet been voted on by the full Senate. No action has been taken on it.