Ensuring Tax Fairness and Financial Security
Millions of Americans save for the future through mutual funds and long-term investments. But every tax season, many of them face a confusing and unfair surprise: a tax bill for gains they didn’t actually receive.
Key Takeaways
- The GROWTH Act will help millions of American registered fund investors build a more secure financial future by allowing them to keep more of their own money working for them longer, without facing an annual tax bill.
- It’s a small change that would have a big impact: helping middle-class savers, reducing barriers to long-term investing, and putting more dollars to work in the economy.
- ICI supports policies and proposals, such as the GROWTH Act, that represent a smart step toward tax fairness and financial security for everyday investors.
Under current law, investors in mutual funds and other registered funds held outside of retirement accounts must pay taxes each year on capital gains distributions—even if they didn’t sell a single share, and even if those gains were reinvested automatically. That means they’re being taxed on money they never really saw.
The bipartisan Generating Retirement Ownership Through Long-Term Holding (GROWTH) Act, introduced in the House and Senate, would let investors defer taxes on automatically reinvested fund distributions until they sell their shares—just like people who invest directly in stocks or bonds already do. This would restore fairness for millions of investors who rely on mutual funds and other registered funds in their taxable accounts. These Americans are doing exactly what policymakers say they should: saving for the future in well-regulated, diversified investment vehicles.
The GROWTH Act Would Benefit Millions of Americans
According to the ICI Annual Mutual Fund Shareholder Tracking Survey, 37.2 million individual investors held long-term mutual funds in taxable accounts in 2024.
The GROWTH Act would largely benefit middle class Americans, seniors, and retirees:
- More than half of the U.S. households that would be helped by the GROWTH Act have less than $150,000 in household income.
- Many older households would also benefit from the GROWTH Act: 45 percent of households holding long-term mutual funds are 65 or older.
