Accredited Investor Bill H.R. 3394: Inflation, Knowledge, Residence

The accredited investor bill moving through Congress, the Fair Investment Opportunities for Professional Experts Act (H.R. 3394), would keep the current $1 million net worth and $200,000/$300,000 income thresholds in place but require the SEC to adjust them for inflation every five years, and it would let more people qualify through professional licenses, education, or job experience instead of wealth. The House passed it 397–12 in 2025, and it now sits before the Senate Banking Committee.¹

What H.R. 3394 Would Change

The bill takes a two-part approach: freeze today’s dollar thresholds in the Securities Act itself, then stop them from eroding further, while widening the non-financial ways a person can qualify.²

Inflation Adjustments Every Five Years

The current thresholds — $1 million in net worth excluding a primary residence, $200,000 in individual income, or $300,000 in joint income — would be written directly into the statute. Every five years, the SEC would raise those figures using the Consumer Price Index for All Urban Consumers, rounded to the nearest $10,000.²

The bill does not raise the thresholds retroactively. If it did, the net worth floor would jump to roughly $3 million and the income floors would more than triple, based on the SEC’s own inflation math. That would cut millions of currently eligible investors out of private markets. Freezing today’s numbers and indexing forward is the compromise that likely produced the 397–12 House margin.

New Ways to Qualify Through Knowledge

The bill would broaden professional qualification in two directions. Anyone currently licensed or registered as a broker or investment adviser — by the SEC, a self-regulatory organization, or a state securities division — would qualify as accredited if they are in good standing. That reaches further than the SEC’s 2020 rule, which recognized only three specific FINRA licenses (Series 7, Series 65, and Series 82).²

The bill would also direct the SEC to write rules recognizing people with “demonstrable education or job experience” relevant to a specific investment, with a self-regulatory organization like FINRA verifying those credentials. The statute leaves the details to the SEC, which would have 180 days after enactment to issue those rules. Which degrees or job titles will qualify won’t be known until then.

Codifying the Primary Residence Rules

The bill writes the treatment of a primary home into the statute. The home’s value does not count as an asset, and mortgage debt up to the home’s fair market value does not count as a liability. Two exceptions travel with it: if you increased your mortgage balance within 60 days before the investment for any reason other than buying the home, the added borrowing counts against your net worth; and if the mortgage exceeds the home’s current value, the underwater portion counts as a liability.² These rules exist in SEC regulations today; putting them in the statute makes them harder to change through rulemaking alone.

Who Qualifies as an Accredited Investor Today

To see what the bill actually shifts, it helps to have the current baseline in view. Under Rule 501 of Regulation D, an individual qualifies as accredited by meeting either of two tests.³

A net worth over $1 million, excluding the value of a primary home, alone or combined with a spouse or spousal equivalent.
Income above $200,000 individually, or $300,000 jointly, in each of the last two years, with the same level expected this year.

Directors, executive officers, and general partners of the company selling the securities also qualify automatically. The SEC’s 2020 amendments added several non-wealth paths, including holders of the Series 7, Series 65, and Series 82 licenses in good standing, spousal equivalents pooling finances, knowledgeable employees of private funds, and qualifying family offices.⁴ The 2020 rule did not change any of the dollar thresholds, which is where H.R. 3394 picks up.

Why Congress Is Acting Now

The $1 million net worth and $200,000 individual income figures have not been adjusted since Regulation D was adopted in 1982. The $300,000 joint income test was added in 1988. Four decades of inflation have quietly expanded the pool of qualifying investors far past what the original numbers were meant to capture.⁵

The SEC’s 2023 review ran the arithmetic. If the thresholds had tracked inflation, the net worth floor would sit near $3 million, the individual income figure around $608,000, and the joint income figure above $911,000.⁵ The share of U.S. households meeting the financial criteria rose from about 13% in 2019 to roughly 18.5% by 2022.⁶

The Dodd-Frank Act, enacted in 2010, tells the SEC to review the definition at least every four years and consider whether the requirements should change for investor protection, the public interest, and the state of the economy.⁵ Dodd-Frank also produced the primary residence exclusion, which took effect in 2011. But the SEC has not used its review authority to raise the dollar figures, leaving that step to Congress. The 2023 SEC review also flagged a related concern: retirement savings now push many households over the $1 million net worth line, and a 401(k)-driven qualifier faces different risks in illiquid private investments than a person with $1 million in liquid assets.

What the Bill Would Mean for You

If You Are an Investor

If you already meet the current thresholds, nothing about your status changes on day one. Indexing runs forward, not back. Over time, the thresholds will rise on a five-year cycle, so a household near the current line may drift out of eligibility at some future adjustment.

If you don’t meet the financial tests, the bill opens two new doors. A broader set of licensed brokers and investment advisers would qualify by license alone. And once the SEC writes the education-and-experience rules, people with a track record in a relevant field could qualify for investments tied to that field. What “relevant” means, and how it will be verified, depends on rules that don’t yet exist.

If You Are Raising Capital

A wider pool of eligible investors is useful to issuers running Regulation D offerings. It also brings new verification work. Confirming a valid securities license is straightforward; evaluating whether a prospective investor’s education or job history meets a future SEC standard is not. Companies conducting Rule 506(c) offerings, where every purchaser must be accredited and the issuer must take reasonable steps to verify, will need processes ready for the new credential categories once the SEC’s rules are in place.⁷

Where the Bill Stands

H.R. 3394 cleared the House 397–12 and has been referred to the Senate Committee on Banking, Housing, and Urban Affairs.¹ The vote suggests broad agreement that the definition needs updating, but Senate action is not guaranteed. Versions of this bill have been introduced in earlier Congresses under the same name without becoming law, so the path forward is uncertain even with a strong House margin.

The SEC’s own review track continues in parallel. Its December 2023 report noted the widening gap between the original purpose of the thresholds and the growing pool of qualifying households.⁵ Whether change comes through this bill or through SEC rulemaking, some update to the accredited investor definition looks likely in the next few years.

1
Congress.gov. H.R.3394 – 119th Congress – Fair Investment Opportunities for Professional Experts Act
2
Congress.gov. Text – H.R.3394 – Fair Investment Opportunities for Professional Experts Act
3
U.S. Securities and Exchange Commission. Accredited Investors
4
U.S. Securities and Exchange Commission. Accredited Investor Definition – Final Rule
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Securities and Exchange Commission. Review of the Accredited Investor Definition under the Dodd-Frank Act
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U.S. Securities and Exchange Commission. Qualifying Households under Accredited Investor Financial Criteria
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U.S. Securities and Exchange Commission. Assessing Accredited Investors under Regulation D