Will legislation that amends the Internal Revenue Code to effectively eliminate the long-term capital gains tax preference for carried interest (applicable partnership interests) become law before Jan 1, 2027

30-day trend

Analysis

This represents the likelihood that Congress will pass and enact a law before year-end 2026 that eliminates the preferential tax treatment for carried interest held by investment fund managers. Carried interest—profits partnerships distribute to managers—currently receives long-term capital gains rates rather than higher ordinary income rates, saving investment professionals significant taxes. Reform efforts have surfaced periodically for over a decade, with supporters arguing it closes a tax loophole for high earners and critics contending it would discourage fund formation. The current 4% probability reflects the legislative difficulty of passing revenue measures during a divided Congress, combined with the short remaining timeline. The primary catalyst would be movement through House Ways and Means Committee, which must initiate revenue legislation. Key dynamics include broader tax policy negotiations, election-year political considerations, and whether reform becomes bundled with other tax legislation rather than pursued independently.

• ›Congress must pass revenue legislation and the President must sign it within approximately 6.5 months—a compressed timeline for complex tax code changes
• ›The composition and priorities of the relevant congressional committees, particularly House Ways and Means, determine whether carried interest reform receives floor time
• ›Carried interest reform has been proposed multiple times over the past 15 years without becoming law, suggesting structural legislative barriers beyond current political dynamics
• ›Whether carried interest reform is pursued as standalone legislation or packaged with broader tax reform, infrastructure, or deficit measures affects its likelihood of passage
• ›Investment industry lobbying and political contributions historically have opposed carried interest taxation changes, creating organized opposition to legislative attempts

What moved the line

• Jun 23Before Jan 1, 2030↑45pp2→47¢ · Kalshi
• Jun 23Before Jan 1, 2029↑15pp7→22¢ · Kalshi
• Jun 23Before Jan 1, 2028↑13pp4→17¢ · Kalshi

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How we compute these odds