Action Alert: Support the GROWTH Act to Level the Playing Field for Mutual Fund Shareholders

Millions of Americans rely on mutual funds like the Domini Funds to help them save for their futures. These well-regulated investment vehicles provide stability and diversification that investors seek when pursuing long-term investment goals for retirement, homeownership, college, and long-term generational wealth building.

The Problem | The Solution | What Can You Do?

The Problem

Unfortunately, mutual fund investors like you face an outdated and undue tax burden that may penalize your efforts to save for the long term. Why?

In the normal course of running a mutual fund, fund managers like Domini buy and sell underlying securities like stocks and bonds. When we sell securities, the fund realizes gains and losses. For example, if we sell a stock for more than the fund originally paid for it, the fund realizes a gain on that sale. Each year, fund managers are legally required to distribute all of those realized gains (net of realized losses) to the fund’s shareholders. These are known as capital gain distributions, and under the current tax code, they are considered taxable income for mutual fund shareholders outside of retirement accounts (you may see this income reflected on your 1099-DIV).

Rather than receive these distributions in cash, many investors choose to automatically reinvest them back into the fund to further contribute to their long-term investment savings. They don’t receive a single dollar of the distributions in cash, and even still, they are taxed on them. This can be blindsiding, as you get hit with a tax bill you have to pay with money you haven’t actually received. Often, this forces investors to sell fund shares to raise cash at a time that may not be ideal, undermining their long-term investment discipline and potentially forcing them to realize capital gains of their own.

This burdensome tax rule also puts mutual fund shareholders at an unfair disadvantage to other investors whose capital gain distributions are treated differently. For many other types of investments, investors only have to pay taxes on capital gains when they sell shares. We believe this should be the case for mutual funds as well.

The Solution

Fortunately, there is a common-sense solution. The Generating Retirement Ownership Through Long-Term Holding Act of 2025 (GROWTH Act) would allow mutual fund investors to reinvest capital gain distributions without facing an unexpected tax bill. The taxes on these capital gains would be deferred until investors sell their shares, as they already are for many other types of investments.

The GROWTH Act is a bipartisan bill (H.R. 2089, S. 1839) that would help put money back in the pockets of millions of Americans, allowing them to invest for the long-term and enjoy compounded returns without worrying about annual tax bills. Importantly, it would help level the playing field for individual mutual fund investors to receive the same treatment as other investors.

Learn more about the GROWTH Act here.

What Can You Do?

Tell your representatives in Congress to support the GROWTH Act and help millions of mutual fund investors like you maximize your long-term financial security.

1. Find your members of Congress using this link. Remember, you have two Senators and one Representative.
2. Call their offices or send them a letter asking them to cosponsor the GROWTH Act. Feel free to use the sample language below.
3. Ask your friends and family to join your advocacy by sharing this page.