Loading…
H.R. 2621119th CongressIn committeeLatest action Apr 3, 2025Decoded by AI · checked against the record
The plain-language version leads. The official text is always the reference.
HR 2621 would let workers deduct tips and overtime from taxable income and stop taxing Social Security benefits, beginning tax year 2026.
75-second read · 5 questions answered below
HR 2621 would allow workers to deduct cash tips and overtime pay from their federal taxable income, available to all filers regardless of whether they itemize, though the deductions phase out above $450,000 for individuals or $900,000 for couples. Starting in 2026, the bill would also eliminate federal income taxes on Social Security benefits entirely. Additionally, it would require that carried interest income earned by hedge fund and private equity managers be taxed as ordinary income rather than at the lower capital gains rate, with penalties up to 40 percent for those who attempt to circumvent the new rules.
Workers who receive tips or overtime pay, retirees receiving Social Security benefits, and high-earning investment fund managers would all be directly affected. The deductions for tips and overtime are unavailable to individuals earning more than $450,000 or couples earning more than $900,000 annually.
Eliminating taxes on Social Security benefits would reduce federal revenue that the Social Security trust funds currently receive, which the bill addresses by requiring the general treasury to transfer replacement funds. Reclassifying carried interest as ordinary income would increase the tax burden on hedge fund and private equity managers who currently pay the lower capital gains rate on that income.
AI-drafted summary. Verify it against the official text before you act on it. Read the official bill on Congress.gov
Right now: a House committee is reviewing it. If the Senate changes it, it goes back to the House before reaching the President.
Latest action: — Referred to the House Committee on Ways and Means.