Litigation Finance Tax Removed from Senate Bill: What Funders and Firms Need to Know
The U.S. Senate has officially passed its version of the One Big Beautiful Bill Act (OBBBA), formally known as H.R. 1 [119th Congress]. Notably, the bill does not include the previously proposed tax on litigation finance profits.
This update is especially significant for litigation funders, law firms, and investors who were closely tracking the legislation’s implications for legal funding models.
The Backstory: A High-Stakes Proposal
Earlier versions of the bill included a proposed 40.8% excise tax on the share of recoveries received by third-party funders. After substantial industry feedback and advocacy, that rate was revised downward to 31.8%. However, the provision was ultimately deemed ineligible for inclusion under Senate budget reconciliation rules by the parliamentarian and was removed from the final Senate version, passed on July 1, 2025.
Why It Mattered So Much
This excise tax would have dramatically reshaped the economics of litigation funding, potentially:
Discouraging capital investment in strong but uncertain legal claims
Increasing the cost of capital to plaintiffs and law firms
Undermining access to justice in cases that require significant up-front resources
Its removal signals growing recognition in Washington that litigation finance plays a legitimate and important role in the legal ecosystem, one that supports balance and fairness, especially in high-stakes or complex matters.
Where Things Stand Now
While the Senate has cleared the bill without the tax, the legislation is now in the House of Representatives, where it could still face amendments. Legal funders and industry advocates remain cautious, aware that similar provisions could reappear through alternate tax strategies or standalone legislation.
What to Watch
The House version of the bill, once finalized, will determine whether litigation finance remains untouched or if new tax language is introduced.
Future legislative cycles may still explore taxation of legal finance as a broader regulatory theme.
Industry coalitions are already mobilizing to engage with House leadership and maintain momentum against such measures.
Final Thoughts
The removal of the litigation finance tax from the Senate’s bill is an important win, but it’s not the end of the story. Continued education, advocacy, and transparency will be essential as the bill moves forward and as litigation finance evolves under public and political scrutiny.
Stay tuned for more updates as we monitor House activity and broader regulatory signals.
At Mirena and Company, we help clients navigate the shifting landscape of litigation finance with strategy, insight, and purpose. Whether you're funding cases or structuring capital, our team stays ahead of policy developments, so you don’t have to.
Learn more about our litigation funding services →
Sources
