A Republican bill with 8 Republican cosponsors · See all 8 cosponsors
Last activity — Read twice and referred to the Committee on Finance.
In committee
Introduced and handed to a committee in the chamber it started in.
The committee holds it, and most bills are never heard from again. A hearing or a committee vote would be news; silence is the usual outcome, and it kills the bill without anyone voting against it.
Its path through Congress
- Introduced
- In Committee
What this bill would do
This bill, known as the "Tackling Predatory Litigation Funding Act," seeks to amend the Internal Revenue Code of 1986. It establishes a new tax on income received by third-party entities that provide financing for civil actions. The tax is based on a percentage that includes the highest rate of tax from section 1 plus 3.8 percentage points. The legislation defines specific terms for litigation financing agreements and qualified litigation proceeds. It also includes rules for how the tax is withheld from payments. These changes are intended to apply to taxable years beginning after December 31, 2025.
Yes· 3 of 4
- Scored +2
Does this give people more protection from unfair business practices?
By taxing litigation financing, the bill may reduce the prevalence of what it terms 'predatory' financing.
- Scored +2
Does this give the federal government more power?
The bill expands federal taxing authority over specific financial arrangements.
- Scored +1
Does this reduce what the federal government owes?
The tax on litigation financing could provide new revenue to the federal government.
The opposite· 3 of 4
- Scored -5
Does this raise the taxes companies pay?
The bill imposes a significant new tax on corporations acting as third-party litigation financiers.
- Scored -4
Does this raise taxes on the highest earners?
The tax targets entities receiving large sums from litigation, which often involves high-net-worth financing.
- Scored -3
Would business owners be better off under this?
The tax and withholding requirements impose an administrative and financial burden on legal-related businesses.
Who it would affect, and how
Potential Positive Impacts for People
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Exemption for Small-Scale Funding: The bill includes an exception where the tax does not apply if the total amount of funds for an individual civil action is less than $10,000 (Section 2, Sec. 5000E-2(3)(C)(i)).
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Exemption for Specific Loan Repayments: A third party may avoid the tax if their right to receive proceeds is limited to the repayment of the principal of a loan, or the principal plus interest at a specific capped rate (Section 2, Sec. 5000E-2(3)(C)(ii)).
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Exemption for Attorney Fee Reimbursement: The tax does not apply to agreements where the third party's right to receive proceeds is limited to the reimbursement of attorney's fees (Section 2, Sec. 5000E-2(3)(C)(ii)).
Potential Negative Impacts for People
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Tax Burden on Third-Party Entities: A tax is imposed on any "covered party"—such as an individual, corporation, or partnership—that receives funds through a litigation financing agreement (Section 2, Sec. 5000E-1(a) and Sec. 5000E-2(2)).
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High Tax Rate: The tax rate is calculated as the sum of the highest rate of tax imposed by section 1 plus an additional 3.8 percentage points (Section 2, Sec. 5000E-1(b)).
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Taxation of Pass-Thru Entities at the Entity Level: For partnerships, S corporations, or other pass-thru entities, the tax is applied directly at the entity level (Section 2, Sec. 5000E-1(c)).
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Withholding Requirements for Parties and Law Firms: Any person who has control or custody of proceeds and has entered into a financing agreement must deduct and withhold 50 percent of the applicable tax percentage from the payments made to the third party (Section 2, Sec. 5000E-3(a)).
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Liability for Failure to Withhold: If a person fails to deduct and withhold the required tax, they may be held liable for interest or penalties (Section 2, Sec. 5000E-3(a)(3)).
Groups and Interests Ranking
Every group the model scored this bill for, from -10 to +10. Tap or hover a score for the reason it gave.
- Economy And Finance
- Does this give people more protection from unfair business practices? — By taxing litigation financing, the bill may reduce the prevalence of what it terms 'predatory' financing. Does this reduce what the federal government owes? — The tax on litigation financing could provide new revenue to the federal government. Does this raise the taxes companies pay? — The bill imposes a significant new tax on corporations acting as third-party litigation financiers. Does this raise taxes on the highest earners? — The tax targets entities receiving large sums from litigation, which often involves high-net-worth financing. Is this likely to grow the economy? — The tax may discourage investment in legal financing markets.
- Demographic And Interest Groups
- Would households on low incomes be better off under this? — The bill contains exemptions for small-scale funding under $10,000. Would business owners be better off under this? — The tax and withholding requirements impose an administrative and financial burden on legal-related businesses.
- Governance And Ideology
- Does this give the federal government more power? — The bill expands federal taxing authority over specific financial arrangements.
- 7/13/2026
- 1 Cosponsor added.
- 4/28/2026
- 1 Cosponsor added.
- 2/26/2026
- 1 Cosponsor added.
- 10/9/2025
- 1 Cosponsor added.
- 6/10/2025
- 1 Cosponsor added.
- 6/5/2025
- 2 Cosponsors added.
- 5/22/2025
- 1 Cosponsor added.
- 5/20/2025
- Read twice and referred to the Committee on Finance.
- Introduced in Senate
One bill Congress.gov lists as related to this one — companions in the other chamber, earlier versions, and bills this one absorbed or was folded into.
Steve DainesRepublican · Montana
Chuck GrassleyRepublican · Iowa
Jon HustedRepublican · Ohio
Bernie MorenoRepublican · Ohio
David McCormickRepublican · Pennsylvania
Ashley MoodyRepublican · Florida
Pete RickettsRepublican · Nebraska
Tim SheehyRepublican · Montana