Carried Interest Fairness Act of 2025

Bill 119 HR 1091, also known as the "Pass-Thru Entity Tax Treatment Act," aims to amend the Internal Revenue Code of 1986 in order to address the tax treatment of personal service income earned in pass-thru entities. Pass-thru entities, such as partnerships and S corporations, allow income to "pass through" to the owners and be taxed at their individual tax rates.

The bill seeks to ensure that personal service income earned in pass-thru entities is taxed appropriately. This is important because there has been concern that some high-income individuals are using pass-thru entities to avoid paying higher tax rates on their personal service income.

Under the proposed legislation, personal service income earned in pass-thru entities would be subject to the same tax rates as if it were earned directly by the individual. This would help prevent individuals from using pass-thru entities as a tax avoidance strategy. Overall, the Pass-Thru Entity Tax Treatment Act aims to promote fairness in the tax system by ensuring that all income, including personal service income earned in pass-thru entities, is taxed appropriately. It is important to note that this bill is still in the early stages of the legislative process and may undergo changes before potentially becoming law.