REAL AMERICA Act
Summary
What This Bill Does
The bill creates a new IRC Section 224 allowing a deduction for cash tips received during the taxable year, available to non-itemizers, with income phaseout at $450K/$900K joint, creates new IRC Section 224 (Cash Tips) — the statutory text inserted by Section 2, providing deduction equal to cash tips included on employer statements, with income limitation, and repeals inclusion of Social Security benefits in gross income (IRC Section 86 termination) effective for tax years after 2025, with appropriations to hold trust funds harmless. It relies on tax credits, tax rate changes, regulatory standard, and spending mandate. The main policy areas are Tax Policy, Finance, Labor, and Agriculture.
Who Benefits and How
Tipped workers (restaurants, hospitality, personal services) could see lower costs, Hourly workers earning overtime pay could see lower costs, and U.S. Treasury / federal revenue could gain revenue opportunities.
Who Bears the Burden and How
U.S. Treasury / federal revenue could face higher costs, Investment fund managers (hedge funds, private equity, venture capital) could face higher costs, and Employers required to report overtime on W-2 would take on compliance duties.
Key Provisions
- Creates a new IRC Section 224 allowing a deduction for cash tips received during the taxable year, available to non-itemizers, with income phaseout at $450K/$900K joint.
- Creates new IRC Section 224 (Cash Tips) — the statutory text inserted by Section 2, providing deduction equal to cash tips included on employer statements, with income limitation.
- Repeals inclusion of Social Security benefits in gross income (IRC Section 86 termination) effective for tax years after 2025, with appropriations to hold trust funds harmless.
- Creates a new IRC Section 225 deduction for qualified overtime compensation (FLSA Section 7 overtime in excess of regular rate), available to non-itemizers, with income phaseout at $450K/$900K, and W-2 reporting...
- Creates new IRC Section 225 (Qualified Overtime Compensation) — statutory text providing deduction equal to qualified overtime compensation, with income limitation and definition of qualified overtime.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
The bill creates a new IRC Section 224 allowing a deduction for cash tips received during the taxable year, available to non-itemizers, with income phaseout at $450K/$900K joint, creates new IRC Section 224 (Cash Tips) — the statutory text inserted by Section 2, providing deduction equal to cash tips included on employer statements, with income limitation, and repeals inclusion of Social Security benefits in gross income (IRC Section 86 termination) effective for tax years after 2025, with appropriations to hold trust funds harmless.
Key Policy Areas
Tax Policy, Finance, Labor, Agriculture
Primary Purpose
The bill creates a new IRC Section 224 allowing a deduction for cash tips received during the taxable year, available to non-itemizers, with income phaseout at $450K/$900K joint, creates new IRC Section 224 (Cash Tips) — the statutory text inserted by Section 2, providing deduction equal to cash tips included on employer statements, with income limitation, and repeals inclusion of Social Security benefits in gross income (IRC Section 86 termination) effective for tax years after 2025, with appropriations to hold trust funds harmless.
Policy Domains
Section 2 — Deduction for Cash Tips
Identified Gains
- Tipped workers (restaurants, hospitality, personal services)
- Hourly workers earning overtime pay
- U.S. Treasury / federal revenue
- Social Security recipients
Identified Costs
- U.S. Treasury / federal revenue
- Investment fund managers (hedge funds, private equity, venture capital)
- Employers required to report overtime on W-2
Sponsors
Steve Cohen
D-TN | Primary Sponsor
Legislative Progress
In CommitteeMr. Cohen (for himself and Mr. Carson) introduced the following …
Introduced in House
Referred to the House Committee on Ways and Means.
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
Social Security Trust Funds, Social Security recipients, U.S. Treasury / federal revenue
U.S. Treasury / federal revenue faces effects in multiple directions
Investment fund managers (hedge funds, private equity, venture capital)
Tipped workers (restaurants, hospitality, personal services)
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
Key Definitions
Terms defined in this bill
Cash tips received during the taxable year included on statements furnished to the employer pursuant to section 6053(a)
Overtime compensation paid as required under section 7 of the Fair Labor Standards Act of 1938 in excess of the regular rate, excluding amounts deducted under section 224
An interest in a partnership held by a person providing investment management services to the partnership, including carried interest arrangements
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology