Lawsuit funders would pay a new federal tax on their profits from legal cases.
This bill would create a new federal tax on the profits made by third-party entities that fund lawsuits. These funders, including individuals, corporations, and even foreign entities, would pay a special tax rate on their earnings from these agreements. The goal is to specifically tax income from litigation financing, which is currently treated under general income tax rules.
Today, income from third-party litigation financing is generally taxed under existing income tax rules, like other business profits or investment gains. After this bill, these profits would be subject to a new, specific federal tax at a rate equal to the highest individual income tax rate plus 3.8 percentage points. This new tax would be partially withheld by the parties paying the funder, and these profits would no longer be counted as regular gross income or capital assets for other tax purposes, unless the agreement is for less than $10,000 or is a traditional loan with specific interest limits.
HR 3512 · 119th Congress · May 20, 2025 · AI Summary by gemini-2.5-flash · 8/10
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49 filings mentioned this bill
Amounts reflect total quarterly lobbying spend reported to the Senate, not bill-specific spending. Source: Senate LDA filings.