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Table 1
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Estimating Additional Revenue From Changing Carried Interest Taxation (in Billions)
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Assumptions:
Using this spreadsheet
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Yale Budget Lab Carried Interest, Billions (total)90.0
Enter values in the blue cells. Please notify me of errors
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U.S. Share of Private Equity-Only Carried Interest, Billions30.0
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Nominal Carried Interest Growth Rate10.0%
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Ordinary Tax Rate (including Medicare tax)40.8%
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Preferential Tax Rate (Including Net Investment Inc. Tax)23.8%
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Rate on Capital Loss Deduction23.8%
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% of Total Carried Interest Tax as Ordinary (Current Law)0.0%
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Effect of AGI Decrease (New Law), % of Total Carry0.0%
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Panel A: Estimated Carried Interest, based on Worldwide Carried Interest for Private Equity Only (Assume Estimated PE Carry is Taxed As Capital)
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2026202720282029203020312032203320342035Total
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Estimated PE Carried Interest ($30.0B start; 10.0% growth);
Assume Taxed as Capital, = 100.0% of Total Carried Interest		 30.0 33.0 36.3 39.9 43.9 48.3 53.1 58.4 64.2 70.6
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Portion Taxed as Ordinary = 0.0% - - - - - - - - - -
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Current Law Revenue:
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Tax on Capital Gain Portion, Rate = 23.8% 7.1 7.9 8.6 9.5 10.4 11.5 12.6 13.9 15.3 16.8
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Tax on Ordinary Portion, Rate = 40.8% - - - - - - - - - -
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Current Revenue 7.1 7.9 8.6 9.5 10.4 11.5 12.6 13.9 15.3 16.8 113.6
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Proposal Revenue:
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Tax Total Carried Interest as Ordinary, Rate = 40.8% 12.2 13.5 14.8 16.3 17.9 19.7 21.7 23.8 26.2 28.8
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Less: Capital Loss Deduction, Rate = 23.8% (7.1) (7.9) (8.6) (9.5) (10.4) (11.5) (12.6) (13.9) (15.3) (16.8)
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Less: Effect of AGI Decrease - - - - - - - - - -
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New Law Revenue 5.1 5.6 6.2 6.8 7.5 8.2 9.1 9.9 10.9 12.0 81.3
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Net New Revenue (Loss) (2.0) (2.3) (2.4) (2.7) (2.9) (3.3) (3.5) (4.0) (4.4) (4.8) (32.3)
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Yale Budget Lab Estimated Revenue (Wyden; New)4.64.75.66.67.88.910.211.613.114.687.7
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Avg.
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Statutory Tax Rate Differential Between Ordinary and Capital Income17.0%17.0%17.0%17.0%17.0%17.0%17.0%17.0%17.0%17.0%17.0%
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Rate Differential Required to Generate Yale Estimates39.0%38.2%39.2%40.4%41.5%42.2%43.1%43.6%44.2%44.5%41.6%
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Table 1 (Continued)
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Estimating Additional Revenue From Changing Carried Interest Taxation (in Billions)
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Panel B: Estimated Carried Interest, based on IRS Data Reported by Yale Budget Lab
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2026202720282029203020312032203320342035Total
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Estimated Total Carried Interest ($90.0B start; 10.0% growth) 90.0 99.0 108.9 119.8 131.8 145.0 159.5 175.5 193.1 212.4
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Portion Taxed as Capital = 100.0% 90.0 99.0 108.9 119.8 131.8 145.0 159.5 175.5 193.1 212.4
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Portion Taxed as Ordinary = 0.0% - - - - - - - - - -
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Current Law Revenue:
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Tax on Capital Gain Portion, Rate = 23.8% 21.4 23.6 25.9 28.5 31.4 34.5 38.0 41.8 46.0 50.6
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Tax on Ordinary Portion, Rate = 40.8% - - - - - - - - - -
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Current Revenue 21.4 23.6 25.9 28.5 31.4 34.5 38.0 41.8 46.0 50.6 341.7
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Proposal Revenue:
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Tax Total Carried Interest as Ordinary, Rate = 40.8% 36.7 40.4 44.4 48.9 53.8 59.2 65.1 71.6 78.8 86.7
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Less: Capital Loss Deduction, Rate = 23.8% (21.4) (23.6) (25.9) (28.5) (31.4) (34.5) (38.0) (41.8) (46.0) (50.6)
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Less: Effect of AGI Decrease - - - - - - - - - -
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New Law Revenue 15.3 16.8 18.5 20.4 22.4 24.7 27.1 29.8 32.8 36.1 243.9
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Net New Revenue (Loss) (6.1) (6.8) (7.4) (8.1) (9.0) (9.8) (10.9) (12.0) (13.2) (14.5) (97.8)
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Yale Budget Lab Estimated Revenue (Wyden; New)4.64.75.66.67.88.910.211.613.114.687.7
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Avg.
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Statutory Tax Rate Differential Between Ordinary and Capital Income17.0%17.0%17.0%17.0%17.0%17.0%17.0%17.0%17.0%17.0%17.0%
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Rate Differential Required to Generate Yale Estimates28.9%28.6%28.9%29.3%29.7%30.0%30.2%30.4%30.6%30.7%29.7%
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