GROWTH Act: Leveling the Playing Field for Mutual Fund Investors

The "Generating Retirement Ownership Through Long-Term Holding Act of 2025" (GROWTH Act) is a bipartisan bill aimed at enhancing financial security for Americans. By allowing investors in mutual funds to defer capital gains taxes on reinvested dividends, the GROWTH Act provides Americans greater options to save for retirement or pursue other financial goals.

The big picture: In 2024, 71 million American households rely on mutual funds, an important investment product that allows investors to diversify their holdings as they save for the future. Research shows (ICI Report, table 30) that 95% of mutual fund dividends were reinvested in 2023. Based on current law, these dividends are subject to capital gains taxes, even though mutual fund shareholders reinvest these gains instead of taking cash inhand.

Supporting investment growth through fairness: The GROWTH Act simply ensures that reinvested mutual fund dividends are not subject to capital gains taxation until the investor sells his or her shares. By creating tax parity between mutual fund shareholders and investors in other types of financial vehicles, the legislation supports the growth of retirement savings and other investment objectives for millions of Americans. Encouraging long-term investment is crucial for economic growth and individual financial security. The GROWTH Act aligns with the U.S. Chamber of Commerce's commitment to fostering a robust economic environment where Americans can thrive.

What people are saying: At the U.S. Chamber of Commerce’s Capital Markets Summit on June 4, 2025, Michael Faulkender, U.S. Treasury Deputy Secretary, explained that deferring capital gains until realized makes sense. “There is intellectual congruence with the idea of the GROWTH Act that the capital gains should be deferred until the owner of the mutual fund actually realizes it, rather than merely because the fund itself has done a rebalancing. There are some other investments out there for which that is not an issue and so there needs to be some congruence there.”

Zoom in: Key benefits of the GROWTH Act include:

• Tax Parity: Mutual fund shareholders can defer taxes on reinvested capital gain dividends, in line with the rules for other investment vehicles, enhancing their ability to grow wealth over time.
• Long-Term Focus: Encourages a mindset of long-term investment and saving, crucial for retirement planning and financial security.
• Broad Impact: Benefits a wide range of investors, from young professionals to retirees, by promoting sustainable wealth accumulation.

What's next: As the GROWTH Act progresses through Congress, the U.S. Chamber of Commerce will continue to advocate for its passage, emphasizing its potential to empower Americans to invest in their future and meet or exceed their financial goals.

About the author

Kristen Malinconico

Kristen Malinconico is Senior Director for the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness. She leads the Center’s portfolios for asset management, derivatives, and fiduciary issues.

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