A Democratic bill with 1 Democratic cosponsor · See the cosponsor
Last activity — Referred to the House Committee on Ways and Means.
In committee
Introduced and handed to a committee in the chamber it started in.
The committee holds it, and most bills are never heard from again. A hearing or a committee vote would be news; silence is the usual outcome, and it kills the bill without anyone voting against it.
Its path through Congress
- 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
- Scored +7
Would people over 65 be better off under this?
The bill provides benefits by repealing the tax on Social Security benefits.
- Scored +7
Would retired people be better off under this?
The bill repeals the inclusion of Social Security benefits in gross income, increasing net income for retirees.
- Scored +6
Does this strengthen Social Security?
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
- Scored -4
Does this raise taxes on the highest earners?
The bill recharacterizes certain partnership gains as ordinary income and increases penalties for underpayments related to investment management services.
- Scored -3
Would people with substantial wealth be better off under this?
The bill recharacterizes certain partnership gains as ordinary income, impacting high-earning partners.
- Scored -3
Does this cut the tax on profits from selling investments?
The bill recharacterizes certain capital gains as ordinary income for investment management partners.
Who it would affect, and how
Potential Positive Impacts for People
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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
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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. Tap or hover a score for the reason it gave.
- Demographic And Interest Groups
- Would retired people be better off under this? — The bill repeals the inclusion of Social Security benefits in gross income, increasing net income for retirees. Would people over 65 be better off under this? — The bill provides benefits by repealing the tax on Social Security benefits. Would households on low incomes be better off under this? — The bill provides new tax deductions for cash tips and overtime compensation. Would middle-income households be better off under this? — The bill introduces deductions for tips and overtime that benefit middle-income earners. Would union members be better off under this? — The bill includes a deduction for qualified overtime compensation. Would people with substantial wealth be better off under this? — The bill recharacterizes certain partnership gains as ordinary income, impacting high-earning partners. Would high-income households be better off under this? — The bill imposes stricter rules and higher penalties on certain investment management income.
- Social Issues And Justice
- Does this strengthen Social Security? — The bill repeals the inclusion of Social Security benefits in gross income and provides funding to protect the trust funds.
- Economy And Finance
- Does this cut taxes for middle-income families? — The bill allows deductions for cash tips and qualified overtime compensation for taxpayers below certain income thresholds. Does this raise taxes on the highest earners? — The bill recharacterizes certain partnership gains as ordinary income and increases penalties for underpayments related to investment management services. Does this cut the tax on profits from selling investments? — The bill recharacterizes certain capital gains as ordinary income for investment management partners.
- 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