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The nonpartisan Congressional Budget Office (CBO) says that President Donald Trump’s new tax-and-spending law will reduce resources for the poorest Americans while boosting income for top earners. The analysis, released August 11, 2025, offers the first official breakdown of how the “One Big Beautiful Bill” affects households at different income levels. According to the Associated Press and the New York Times, the bottom 10% will lose about $1,200 a year, while the top 10% will gain roughly $13,600.
What’s in the Big Beautiful Bill
In its distribution analysis of the Big Beautiful Bill, the Congressional Budget Office found that while middle-income households see small increases, the largest benefits go to high earners. The gains at the top come from permanent lower individual rates, a higher estate-tax threshold, extended pass-through deductions, and SALT cap adjustments. Losses at the bottom are driven by stricter eligibility for SNAP and new Medicaid requirements projected to increase the uninsured population by around 10 million over the decade.
The Congressional Budget Office’s latest report also notes that while total economic output may grow modestly in the near term, household-level impacts vary sharply. The poorest are projected to experience both reduced public benefits and minimal tax relief.
The package, formally H.R. 1, extends and reshapes large parts of the 2017 tax code. It locks in the doubled standard deduction, maintains the 20% pass-through (199A) deduction, and keeps a higher estate-tax exemption. It also introduces a temporary higher SALT cap, adjusted AMT thresholds, and several targeted tax breaks such as deductions for tip income (2025–2028), qualified overtime pay, and limited vehicle loan interest for U.S.-assembled cars. Seniors get an additional $6,000 deduction through 2028, subject to income limits.
Expert Insight on Fiscal Risks and Safety-net Cuts
To ground this, BNA’s Expert Panel points to Maya MacGuineas, president of the Committee for a Responsible Federal Budget, whose work focuses on debt sustainability and responsible tax policy. In recent commentary, she warned that “permanent rate cuts without offsets deepen deficits and shift burdens to future taxpayers.” Read her profile for more context on her economic policy stance.
CBO’s numbers explain the tilt. Work requirements for food assistance could remove 2.4 million people from SNAP, and tighter Medicaid access would shrink coverage while raising healthcare costs for many low-income families. These changes outweigh modest tax benefits for the poorest households. Supporters argue the law encourages work and boosts growth; opponents point to the immediate drop in resources for vulnerable groups.
Political and Economic Stakes
The bill passed along party lines, with Republicans framing it as a pro-growth, middle-class tax plan and Democrats calling it a transfer of wealth upward. Historically, similar tax-cut packages, like the 2001 and 2017 laws, have sparked debates about deficits, distribution, and long-term growth. Economists are split: some see investment and productivity gains; others warn of higher borrowing costs and reduced fiscal space in future downturns.
Looking ahead, the Congressional Budget Office will release follow-up estimates as the IRS implements the provisions and taxpayers adjust behavior. Lawmakers on both sides are already signaling possible revisions, especially to the safety-net provisions that drive the CBO’s projected losses for the poorest.
Should Congress revisit the Big Beautiful Bill to prevent losses for the poorest Americans? Tell us what you think.
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