H.R. 2621: Reward Each American’s Labor And Make Every Rich Individual Contribute Again Act

The "Reward Each American’s Labor And Make Every Rich Individual Contribute Again Act" is a legislative proposal that seeks to amend existing tax laws in a few significant ways. The primary provisions of the bill involve changes to how various types of income and contributions are treated for tax purposes and include the following key features:

Tax Deductions for Cash Tips

One major aspect of the bill is the introduction of deductions for cash tips. This means that individuals who receive tips as part of their income would be allowed to deduct those amounts from their gross income, potentially lowering their overall tax burden. This provision aims to benefit workers in service industries who rely heavily on tips for their earnings.

Exclusion of Social Security Benefits

The bill proposes to repeal the current inclusion of Social Security benefits in gross income. This means that individuals receiving Social Security payments would no longer have to count those benefits as part of their taxable income, which could result in lower taxes for seniors and those with disabilities who depend on these benefits for their livelihood.

Adjustments to Investment Services Partnership Interests

This section focuses on investment services partnership interests, making changes to prevent certain tax avoidance strategies. It aims to clarify the treatment of distributions related to these interests and modify accounting rules. The bill establishes penalties for those who underreport their income related to these provisions, thereby promoting compliance with tax laws.

Effective Dates

The amendments proposed by this bill are set to take effect for taxable years starting after 2025. This allows businesses and individuals time to prepare for the implementation of these changes.

Summary of Objectives

The overarching goal of the bill is to create a fairer tax system by ensuring that income from tips and Social Security benefits is taxed more favorably, as well as tightening regulations around investment partnerships to reduce tax evasion. By adjusting these various tax codes, the legislation seeks to provide relief to certain groups of taxpayers while enhancing enforcement measures to ensure compliance.

Relevant Companies

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