Budget scorers and policy think tanks have weighed in on the budget reconciliation package’s expected impact on the federal deficit and which groups of taxpayers stand to benefit the most from Republicans’ proposals.
The House budget bill, titled the One Big Beautiful Bill Act (OBBBA; H.R. 1), passed 215-214 last Thursday following a marathon Rules Committee hearing and last-minute changes to the state and local tax (SALT) deduction limit. Republicans had hoped to clear the bill out of the House before Memorial Day, putting pressure on last week’s negotiations with Freedom Caucus holdouts.
Revenue projections and distribution analyses of the bill — both of the tax component and the complete budget — are continuing to be released or updated.
Budget deficits.
According to the Penn Wharton Budget Model’s (PWBM) most recent estimates released Friday, the OBBBA would “increase primary deficits by $2.8 trillion over 10 years.” Through fiscal year 2034, the tax provisions, the bulk of which extend or adjust Tax Cuts and Jobs Act policies, would cost about $4.3 trillion, the PWBM estimated.
Its brief added that the Armed Services, Judiciary, and Homeland Security titles would also add $230 billion to the deficit. “These changes would be partly offset by spending cuts of $1,791 billion, for a total conventional cost of $2,787 billion.” Taken altogether, the spending cuts offset less than 40% of the expenditures.
However, the PWBM said the “dynamic cost” that takes into account certain “microeconomic responses and compositional effects” exceeds the conventional cost, for a total of $3.2 trillion.
While GDP would slightly increase over the next decade, the “actual savings from economic growth do not appear until 2033 and 2034 and are not enough to overcome higher costs in earlier years in the 10-year budget window,” the PWBM said. “After 2033, the dynamic costs fall relative to conventional, a difference which persists until 2054.”
Meanwhile, the Joint Committee on Taxation on May 22 updated its score, saying the tax provisions would “reduce Federal revenues by about $3,819 billion over the budget window for fiscal years 2025-2034, relative to the present-law baseline.”
Earlier in the week, the Congressional Budget Office (CBO) on May 20 projected the OBBBA to increase deficits by $2.3 trillion over 10 years. But the Committee for a Responsible Federal Budget (CRFB) disagreed, posting its estimates the next day. The CRFB’s math is closer to the PWBM’s dynamic cost, projecting a $3.1 trillion deficit hit.
“Importantly, CBO has not yet fully evaluated the interactions among the titles within the bill,” the CRFB said in explaining the discrepancy. “It preliminarily estimates $120 billion of reduced savings due to interactions; however, there are likely significant interactions that have not yet been estimated between the Agriculture and Energy & Commerce titles and the health measures in the Ways & Means and Energy & Commerce titles.”
These interactions would “reduce estimated savings” by $150 billion, per the CRFB.
Distributional effects.
On May 22, the Institute on Taxation and Economic Policy examined how the tax provisions would be split among income groups.
“For working-class Americans, the tax cuts in the House bill are extremely modest and overall taxes would rise for these families when the impact of higher import taxes, or tariffs, are accounted for,” according to ITEP. Conversely, the “richest 1 percent” would see a total $121 billion in net tax cuts next year. This would “exceed the amount going to the entire bottom 60 percent of taxpayers (about $90 billion).”
Adding additional context, ITEP said in 2026, the “poorest fifth of Americans” would benefit from just 1% of the tax savings “while the richest fifth” would receive 68%. About 43% of the cuts would go to the top 5% next year, and the top 1% would benefit from “an average net tax cut of nearly $69,000,” ITEP reported.
The Center on Budget and Policy Priorities (CBPP) in its own estimates also published Thursday agreed the bill is “heavily skewed to the wealthy.” Under the CBPP’s model, the top 1% would “receive tax cuts three times the size of those for people with incomes in the bottom 60 percent.”
The bill’s cuts to Medicaid and SNAP “roughly equal” the tax cuts for “very high-income” individuals, the CBPP continued. Millionaires would see 4.3% income increase, while the economic consequences of the Trump administration’s tariffs “would erase much of the tax benefit” to moderate- and low-income earners.
Based on PWBM’s estimates, those making less than $17,000 “would lose about $820 under the House reconciliation bill,” a 14.6% loss on average. Taxpayers with incomes between $17,000 and $50,999 also would lose an average $430. “Lower income households tend to fare worse as spending cuts deepen over time,” the PWBM noted.
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