H.R. 3275 · Where this bill is now
In committee
Introduced in the House, sent to the Committee on Ways and Means, May 8, 2025
What this bill does
In plain words · AI-written from the official summaryTax breaks and changes for small businesses
This bill makes several changes to how businesses are taxed. It lowers the federal income tax rate for small corporations on their first $400,000 of income. It also increases the tax deduction for people who are self-employed, meaning they can subtract more of their self-employment taxes from their income. The bill also changes how carried interest—the profits that partners in private equity firms and hedge funds receive—gets taxed, and it raises the federal tax on stock buybacks.
How it affects you
Small business owners with incomes under $5 million and self-employed people earning less than $400,000 would see tax changes that could lower what they owe. General partners at private equity firms and hedge funds would pay different taxes on their profits. If you own stock in companies that buy back their own shares, those companies would pay a higher federal tax on those buybacks, though the summary doesn't explain how that would affect individual investors.
Read the official summary (Introduced in House, May 8, 2025)
Small Business Tax Relief Act
This bill reduces the federal corporate income tax rate for certain small businesses, increases the federal tax deduction for self-employment taxes, modifies the taxation of carried interest, and increases the federal excise tax on stock buybacks.
For corporations with taxable income that does not exceed $5 million, the bill reduces the income tax rate on the portion of the corporation's taxable income that does not exceed $400,000 to 18% (currently 21%).
The bill increases the tax deduction for self-employment taxes for individuals with an adjusted gross income of less than $400,000 to 75% (from 50%) of such taxes paid.
Under the bill, net capital gain and loss attributable to carried interest is taxed at ordinary income tax rates. (Carried interest is currently taxed at capital gains tax rates, which may be lower than applicable ordinary income tax rates. Carried interest is the share of profits received by the general partner in a private equity firm or hedge fund from the assets managed by that general partner.)
The bill
• treats as ordinary the money (or fair market value of property) received by a partner in a sale or exchange of carried interest,
• requires distributions of carried interest by a partnership in exchange for interest in other partnership property to be recognized ordinary gain, and
• imposes self-employment taxes on carried interest income.
Finally, the bill increases the excise tax on stock buybacks to 1.5% (from 1%) of the repurchased stock’s fair market value.
Written by AI (Claude) using only the official summary by the Congressional Research Service, the Library of Congress’s nonpartisan research staff. It can miss nuance, so check the official summary and the bill text for details.
1st SessionH. R. 3275
A BILL
Small Business Tax Relief Act
Sponsor: Rep. Angie Craig (D-MN-2) · Introduced May 8, 2025 · Taxation · 1 version of the text
Sources: Congress.gov actions and votes · bill text from GovInfo · latest official action May 8, 2025: “Referred to the House Committee on Ways and Means.”
Sections
Sections · 6
- Sec. 1Short titleNo change
- Sec. 2Graduated corporate tax rate to support small businessesNo change
- Sec. 3Partnership interests transferred in connection with performance of servicesNo change
- Sec. 4Special rules for partners providing investment management services to partnershipsNo change
- Sec. 5Enhanced deduction for certain self-employed individualsNo change
- Sec. 6Increased excise tax on repurchase of corporate stockNo change