Tax on Litigation Financing Income
Official: Tackling Predatory Litigation Funding Act
IntroducedMay 20, 2025
Why This Matters
This bill introduces a tax on money earned from financing lawsuits by third parties. It aims to regulate the income generated from these legal funding agreements.
If you are involved in litigation financing, you will have to pay a new tax on your earnings.
Affects: Third-party entities that provide financing for lawsuits, such as investors and corporations.
What changes is this bill making?
1. This bill creates a tax on income from litigation financing received by third parties. 2. The tax applies to any qualified litigation proceeds received by these third parties. 3. The tax rate includes the highest income tax rate plus an additional 3.8 percentage points. 4. It affects third-party entities that fund legal cases but are not attorneys. 5. The tax is applied at the entity level for partnerships and similar organizations.
Who is affected?
Third-party entities that provide financing for lawsuits, such as investors and corporations.