By December 31, 2026, will a piece of federal legislation be enacted (i.e. passed by both chambers of Congress and signed into law, or otherwise become effective) that eliminates or substantially restricts the preferential tax treatment of carried interest for private equity and hedge fund managers?

Background & Rationale:

The carried interest tax treatment lets fund managers pay tax at the lower long‐term capital gains rate (roughly 20%) on performance-based income, rather than the higher ordinary income rate (up to about 37%). President Trump has repeatedly stated that ending this “loophole” is a priority. However, previous attempts—even when championed by Trump—have stalled due to intra-party divisions, strong lobbying by influential financial industry groups, and the challenge of fitting such a change into a broader tax reform package.

Resolution Criteria:

The market will resolve YES if, by December 31, 2026, a federal law is enacted that (a) eliminates the preferential long-term capital gains tax treatment for carried interest, or (b) restricts it so that the tax rate on carried interest rises to a level comparable to ordinary income rates, such that the benefit enjoyed by private equity or hedge fund managers is effectively removed.

It will resolve NO if no such legislation is enacted or if any enacted law leaves the carried interest tax treatment substantially unchanged (for example, if the preferential treatment remains in place or is only minimally altered).

Additional Notes:

“Substantially restricts” should be understood as any legislative change that meaningfully narrows the tax advantage—if the change is largely symbolic or limited in scope, it would count as not having met the proposition’s criteria.