carried interest

[ kar-eed in-ter-ist, in-trist ]

noun

, Finance.

1. a share of profits received by managers of private investment funds, as private equity and hedge funds, unrelated to initial money the managers may or may not have contributed:

   His piles of accumulated carried interest have fallen neatly into a tax-free loophole.

Word History and Origins

Origin of carried interest¹

First recorded in 1750–55

Example Sentences

The ultrawealthy successfully lobbied to stop Presidents Obama and Biden from repealing the “carried interest” loophole that saves private equity executives billions by taxing their profits at lower capital gains rates, around 20 percent, instead of higher personal income tax rates, around 37 percent.

From Slate

One new proposal tackles something that federal lawmakers have failed to do: closing the carried interest loophole, which allows hedge-fund and private equity executives to pay tax rates that are lower in some cases than those paid by entry-level employees.

From New York Times

Another bonus: About $190 million of Mr. Schwarzman’s compensation is tied to carried interest, a common form of Wall Street pay that has a relatively low tax rate.

From New York Times

The Biden administration wanted to close the carried interest loophole, but senior officials blamed fierce lobbying in Washington by the private equity industry for stymieing those plans.

From New York Times

She also ensured that a tax on the carried interest on private equity earnings was kept out of the IRA legislation.

From Salon