REAL AMERICA Act
Analysis under review: This bill has generated analysis that may be too generic or incomplete. Clause-level evidence remains available below.
Summary
The REAL AMERICA Act makes several changes to federal income taxes. It creates new tax deductions for cash tips and overtime pay, both available to workers earning under ,000 per year (,000 for joint filers). It eliminates federal taxes on Social Security benefits starting in 2026, while appropriating funds to keep Social Security trust funds whole. On the revenue side, the bill closes the carried interest loophole by requiring that investment fund managers pay ordinary income tax rates on their performance-based compensation rather than lower capital gains rates. It also changes how partnership interests received as compensation for services are valued and taxed.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers.
At a Glance
What This Bill Does
Amends the Internal Revenue Code to provide tax deductions for cash tips and overtime compensation, repeal taxation of Social Security benefits, modify rules for partnership interests transferred for services, and close the carried interest tax loophole by recharacterizing carried interest income as ordinary income.
Who Benefits
- Tipped workers
- Hourly workers earning overtime
- Social Security recipients
Who Bears Costs
- Investment fund managers (hedge funds, private equity)
- Federal revenue (net impact uncertain)
Key Policy Areas
Tax Policy, Labor, Social Security, Finance
Primary Purpose
Amends the Internal Revenue Code to provide tax deductions for cash tips and overtime compensation, repeal taxation of Social Security benefits, modify rules for partnership interests transferred for services, and close the carried interest tax loophole by recharacterizing carried interest income as ordinary income.
Policy Domains
Legislative Strategy
"Populist tax relief package that pairs worker-oriented tax deductions (tips, overtime, Social Security) with a revenue-offsetting closure of the carried interest loophole used by wealthy investment fund managers"
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