On May 15, 2025, the House released the draft FY 2025 budget bill. As currently drafted, the budget bill does not limit or otherwise change the tax treatment of carried interest. Following the release of the budget bill, various Democratic Senators sent a letter to President Trump requesting that he refuse to sign any budget legislation that does not close the carried interest loophole.
The past and current Trump Administrations have repeatedly stated their desire to close the carried interest loophole, including earlier this year when President Trump met with republican legislators to lay out his tax agenda (as discussed here). Notably, the first Trump Administration limited the carried interest loophole with the passage of the TCJA’s three-year holding period requirement for capital gains treatment for carried interests. At this stage, it remains to be seen whether the Senate will propose carried interest legislation when they mark up the budget bill later this summer, or whether President Trump will push back on any legislation that does not close the carried interest loophole.
