Bill · H.R. 2621· House(119-HR-2621)
REAL AMERICA Act
- Introduced
- 4/3/2025
- Last activity
- 4/3/2025 — Referred to the House Committee on Ways and Means.
- Sponsored by
- Steve Cohen
- Cosponsors
- - 1 - 0
- Introduced
- In Committee
What this bill would do
The REAL AMERICA Act proposes several significant changes to the Internal Revenue Code of 1986. It establishes new tax deductions for cash tips and qualified overtime compensation for certain taxpayers. The bill also repeals the inclusion of Social Security benefits in gross income. Additionally, it introduces new rules for partnership interests transferred in connection with services. Finally, it establishes specific rules for partners providing investment management services to partnerships.
Yes· 3 of 7
Would people over 65 be better off under this?+7
The bill provides benefits by repealing the tax on Social Security benefits.
Would retired people be better off under this?+7
The bill repeals the inclusion of Social Security benefits in gross income, increasing net income for retirees.
Does this strengthen Social Security?+6
The bill repeals the inclusion of Social Security benefits in gross income and provides funding to protect the trust funds.
The opposite· 3 of 4
Does this raise taxes on the highest earners?-4
The bill recharacterizes certain partnership gains as ordinary income and increases penalties for underpayments related to investment management services.
Would people with substantial wealth be better off under this?-3
The bill recharacterizes certain partnership gains as ordinary income, impacting high-earning partners.
Does this cut the tax on profits from selling investments?-3
The bill recharacterizes certain capital gains as ordinary income for investment management partners.
Who it would affect, and how
Potential Positive Impacts for People
-
Deduction for Cash Tips: Taxpayers can claim a deduction for cash tips received during the taxable year, provided their modified adjusted gross income does not exceed $450,000 (or $900,000 for joint returns). This applies even to non-itemizers. (Section 2)
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Deduction for Qualified Overtime Compensation: Individuals can take a deduction for qualified overtime compensation that exceeds their regular rate of pay, subject to the same income limits as the tip deduction. (Section 4)
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Repeal of Social Security Benefit Inclusion: The bill repeals the requirement to include Social Security benefits in gross income for taxable years beginning after December 31, 2025. (Section 3)
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Protection of Social Security Trust Funds: The bill provides money from the Treasury to the Social Security and Railroad Retirement funds to make up for the reduction in transfers caused by the change in how benefits are taxed. (Section 3)
Potential Negative Impacts for People
-
Income Limits on Deductions: The deductions for cash tips and qualified overtime compensation are unavailable to taxpayers with a modified adjusted gross income exceeding $450,000 individually or $900,000 for joint returns. (Section 2 and Section 4)
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New Rules for Investment Management Partners: Partners providing investment management services will face new rules where certain gains and losses are treated as ordinary income or loss rather than capital gains. (Section 6)
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Increased Penalties: A higher penalty of 40 percent (up from 20 percent) may be applied to underpayments related to the new rules for investment management services. (Section 6)
Groups and Interests Ranking
Every group the model scored this bill for, from -10 to +10. Hover a score for the reason it gave.
- Demographic And Interest Groups
- Good For Retirees+7Good For Seniors+7Good For Low Income Households+5Good For Middle Class Households+5Good For Union Workers+3Good For High Net Worth Individuals-3Good For High Income Households-2
- Social Issues And Justice
- Improves Social Security+6
- Economy And Finance
- Reduces Middle Class Taxes+5Increases Wealthy Taxes-4Reduces Capital Gains Tax-3
- 4/3/2025
- Referred to the House Committee on Ways and Means.
- 1 Cosponsor added.
- Introduced in House
3 bills Congress.gov lists as related to this one — companions in the other chamber, earlier versions, and bills this one absorbed or was folded into.
André CarsonDemocrat · Indiana