H.R. 2089 would allow individual investors to temporarily avoid paying taxes on capital gains distributions from mutual funds and similar investment companies when those distributions are automatically reinvested to buy additional shares. Instead of owing taxes immediately, investors would defer the tax until they sell their shares or pass away—at which point the deferred gains would be recognized. The bill also grants new shares acquired through reinvestment a favorable one-year holding period for tax purposes, potentially reducing capital gains tax rates. The legislation would not apply to dependents, estates, or trusts, and would take effect for tax years ending after enactment. This change is intended to encourage long-term retirement investing by reducing the annual tax burden on reinvested dividends.
Take Action
Your position
Add a comment
to comment on this bill.
Annotate the text
Highlight any passage on the Summary or Full Text tab to attach a note. Annotations appear on the Annotations tab.