Ensuring Tax Fairness and Financial Security

ICI advocates for commonsense tax policies that benefit regulated funds and individual investors.

Millions of Americans save for the future through mutual funds and long-term investments. As Americans try to keep up with rising costs, ICI is advocating for policies to help them keep more of their hard-earned money. But every tax season, mutual fund investors are unfairly penalized with a tax bill for capital gains they didn’t actually receive.

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, and that tax burden denies them up to $1,340 in returns (on a $10,000 investment in an actively managed mutual fund over a 10-year period).
 
The bipartisan GROWTH Act, introduced in the House and Senate, would let investors defer taxes on automatically reinvested capital gains distributions until they sell their shares—just like people who invest directly in stocks or bonds. Passing the GROWTH Act will end the unfair penalty on millions of investors who rely on mutual funds and other registered funds in their taxable accounts. These Americans should not lose out for doing exactly what policymakers say they should do: saving for the future in well-regulated, diversified investment vehicles.

According to ICI's Ownership of Mutual Funds and Shareholder Sentiment, 2025 report, 24.8 million households owned mutual funds in taxable accounts in 2025.

The GROWTH Act would largely benefit middle-class Americans, seniors, and retirees:

• More than 50% of the impacted households have less than $150,000 in household income.
• 45% of households holding long-term mutual funds are 65 or older.
• 13.4% more in returns in investors’ pockets after 10 years, on certain investments.