Not in the way the headline’s wording may suggest. The Congressional Budget Office estimates that households in the lowest income tenth will have fewer resources overall under the 2025 law, mainly because of reductions to in-kind benefits such as Medicaid and SNAP—not because CBO found that their tax bills rise. Meanwhile, the highest-income tenth is projected to gain substantially, largely because of lower taxes.
What CBO’s estimate measures
The analysis covers Public Law 119-21, the reconciliation law enacted in 2025. CBO measures the law’s projected effect on household resources, not just taxes. Its estimate combines federal taxes and cash transfers, federal and state in-kind transfers, states’ fiscal responses, and other spending and revenues allocated as public goods. The result is a broader measure of how policy changes affect households than a calculation of tax bills alone.
CBO compares the law with its January 2025 baseline and averages the projected effects over 2026–2034. The figures below are average annual changes in 2025 dollars, unless identified as aggregate totals. The effects vary during the period as provisions phase in and out. CBO’s report page and interactive explanation of its method describe the analysis.
How projected effects differ by income
CBO ranks households by income and divides them into ten groups, or deciles. “The poorest tenth” refers to the lowest-ranked group in that analysis; it does not mean every low-income household has the same outcome. CBO reports the following average annual changes:
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| Household group | Average annual change in resources | Change as share of projected income |
|---|---|---|
| Lowest income decile | About −$1,200 | −3.1% |
| Fifth income decile | About +$800 | +0.8% |
| Sixth income decile | About +$1,200 | +1.0% |
| Highest income decile | About +$13,600 | +2.7% |
These are CBO projections relative to its January 2025 baseline, averaged over 2026–2034; they are not amounts every household will receive or lose. The reported changes are in 2025 dollars. See the CBO report PDF for the decile estimates.
Why the lowest-income group loses resources
CBO attributes most of the lowest-decile decline to reduced in-kind transfers, chiefly Medicaid and SNAP. These benefits are not cash deposited in a household’s bank account, but they support household well-being and are included in CBO’s resource analysis. After the projected decrease, households in this decile are estimated to receive about $6,000 a year in transfers, net of federal taxes, on average during 2026–2034.
That is why “raises taxes on the poor” is not a precise description of what this CBO estimate establishes. The report finds a loss in the lowest decile’s overall resources, mainly through benefit reductions. Its published distributional estimate does not establish that the poorest households’ tax bills rise. Tax effects and changes to benefits are separate channels, even though both affect the resources available to a household.
How the four resource channels contribute
CBO also estimates aggregate effects across households for four channels. These are net changes over 2026–2034, not amounts per household:
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| Resource channel | Net change |
|---|---|
| Federal taxes and cash transfers | +$3.3 trillion |
| Federal and state in-kind transfers | −$900 billion |
| States’ fiscal responses | +$11 billion |
| Other spending and revenues allocated as public goods | +$308 billion |
These aggregate channel totals are reported in 2025 dollars. They are not directly interchangeable: for example, CBO can count reduced taxes and increased border-security spending as positive effects on resources, although households benefit from them in different ways. The totals therefore do not mean that each household receives an equivalent cash gain. The CBO method and definitions explain how the channels are treated.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What the estimate can—and cannot—show
- It supports a distributional claim, not a universal claim about individual tax bills. On average, the lowest decile loses resources while the fifth, sixth, and highest deciles gain. A decile average does not predict every household’s result.
- It does not isolate every tax provision. The Joint Committee on Taxation’s distributional analysis covers most, but not all, provisions; CBO excludes tax provisions JCT did not allocate.
- It is a projection, not a record of realized household outcomes. CBO estimates effects against a January 2025 baseline for 2026–2034, and says results vary as components phase in and out.
- It leaves out some broader effects. The analysis excludes additional debt-service costs and macroeconomic effects.
CBO summarized its finding this way: “CBO estimates that as result of P.L. 119-21, U.S. households, on average, will see an increase in the resources available to them over the 2026–2034 period. The changes in resources will not be evenly distributed among households.” The sentence is from the agency’s Aug. 11, 2025 report.
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