By Richard Rubin

WASHINGTON -- Republicans' tax-and-spending megabill would give more money to middle-income and high-income households while taking benefits away from low-income people, according to a Congressional Budget Office analysis released Thursday.

The study by Congress's nonpartisan scorekeeper looks at the combined effects of many of the House bill's tax reductions and its cuts to federal programs, including Medicaid and nutrition assistance. The Republican-controlled Senate is considering changes to the measure, which passed the House last month, as lawmakers try to meet a July 4 goal to get the measure to President Trump's desk.

The bill's benefits increase steadily with income. Households near the middle of the income distribution would see their resources increase because of the bill by an annual average of $500 to $1,000, providing a boost worth 0.5% to 0.8% of their income. The top 10% of households would see a gain of about $12,000, or about 2.3% of income, largely because of tax cuts. That is all compared with current law, a scenario in which Trump's 2017 tax cuts expire as scheduled Dec. 31.

On average, according to CBO, the bottom 30% of households would come out worse off, losing household resources. Income groups above that get more resources than they would under current law, on average. The bottom 10% of households would lose about $1,600 because of benefit cuts, equal to about 3.9% of income.

The House bill would permanently extend the 2017 tax cuts. Those cuts lowered tax rates, shrank the estate tax, aided business owners, increased the standard deduction and boosted the child tax credit.

On top of those extensions, Republicans are proposing new, temporary tax cuts that largely benefit middle-income households -- people who make enough money to pay income taxes. Those provisions include further expansions of the standard deduction and child credit as well as versions of Trump's campaign promises to cut taxes on tips, overtime pay, senior citizens and auto-loan interest. As those provisions expire, the bill turns from positive to negative for many lower-middle income households.

The tax cuts do relatively little for lower-income people who don't work or who pay federal payroll taxes but not income taxes. But many of them would be affected by the changes to programs, which Republicans have hailed as a major step toward lowering federal spending.

The CBO analysis examines only the House version.

Republicans say their bill is essential to preventing a tax increase in 2026 and that the economy and working households would suffer if the tax cuts all expire.

"It would be what is known in economics as a sudden stop. It would be cataclysmic," Treasury Secretary Scott Bessent told the Senate Finance Committee on Thursday, warning of significant job losses. "Working Americans would bear the brunt."

Republicans say many of the people losing benefits under the bill are those who are in the country illegally or who otherwise should be ineligible.

"These reforms target waste, fraud and abuse that proliferated in our spending programs," Senate Finance Committee Chairman Mike Crapo (R., Idaho) said Thursday.

Democrats have highlighted the contrast between the bill's tax cuts for higher-income households and the cuts in Medicaid and the Affordable Care Act. They have called it an immoral class war.

"It is caviar over kids," Sen. Ron Wyden (D., Ore.) said Thursday. "It is Mar-a-Lago over the middle class."

Write to Richard Rubin at richard.rubin@wsj.com

(END) Dow Jones Newswires

June 12, 2025 11:55 ET (15:55 GMT)

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