The Republican megabill now before the Senate cuts taxes for high earners and reduces benefits for the poor. If it’s enacted, that combination would make it more regressive than any major tax or entitlement law in decades.
How the Bill Would Affect Households at Different Income Ranks
Estimated annual average change in resources between 2026-34
Note: Estimated annual average effect of the House version of the One Big Beautiful Bill Act on after-tax income. Groups are based on income adjusted for household size.
The bill as passed by the House in May would raise after-tax incomes for the highest-earning 10 percent of American households on average by 2.3 percent a year over the next decade, while lowering incomes for the poorest tenth by 3.9 percent, according to new estimates by the Congressional Budget Office.
The shape of that distribution is rare: Tax cut packages have seldom left the poor significantly worse off. And bills that cut the safety net usually haven’t also included benefits for the rich. By inverting those precedents, congressional Republicans have created a bill unlike anything Washington has produced since deficit fears began to loom large in the 1990s.
“I’ve never seen anything that simultaneously really goes after poor people and then really helps rich people,” said Chuck Marr, the vice president for federal tax policy at the left-leaning Center on Budget and Policy Priorities.
To the extent that some prior bills have also been regressive, they still haven’t looked quite like this.
Comparing Major Tax and Entitlement Bills
The G.O.P. plan is among the bills projected to benefit the highest-income group while hurting the lowest.
2025
Current G.O.P. bill
Lose
Gain
2017
Obamacare repeal*
Lose
Gain
1997
Tax and budget acts
Unclear
Gain
1996
Welfare act
Lose
No change
2022
Inflation Reduction Act
Gain
Lose
2021
Build Back Better*
Gain
Lose
2010
Affordable Care Act
Gain
Lose
1993
Clinton budget act
Gain
Lose
1990
H.W. Bush tax act
Gain
Lose
2017
First Trump tax cuts
Gain
Gain most
2013
Obama tax cuts
Gain
Gain most
2001/03
W. Bush tax cuts
Gain
Gain most
The calculations the C.B.O. published are what’s known as a distributional analysis. This type of study estimates how legislation will affect people across the income distribution, taking into account the taxes they pay and the government benefits they receive. Lawmakers often think about legislation in terms of its overall effects: Does it raise or lower the deficit? Does it grow or stifle the economy? But this kind of analysis helps illustrate who benefits and who is hurt by a bill.
“Ultimately, people care about who are the winners and who are the losers,” said Alan Auerbach, a professor of economics and law at the University of California, Berkeley, who has studied fiscal policy for decades.
Stephen Miran, chair of the White House Council of Economic Advisers, dismissed the C.B.O.’s analysis as missing who those winners are in the bigger picture.
“The best way to help workers across the income distribution, including all the folks in the bottom, is to create an environment in which firms want to hire them,” he said, pointing to rising wages and low unemployment after the passage of the major tax cut package during the first Trump administration. He disputed that low-wage workers would now be hurt in this bill by changes to Medicaid and food assistance.
To put the current bill in context, we have assembled similar analyses of major tax and social welfare bills from the last four decades.
The analyses below aren’t all exactly the same. Most were originally published around the time each bill was debated in Congress. They were produced by a few different analysts, because no one group has routinely published distributional tables. They don’t always cover every provision in every bill, which means some charts may be missing a few relevant effects. They evaluated slightly different time windows after enactment. In cases where we lacked complete data, we have not shown a complete chart, but instead characterized a bill’s effects on the highest- and lowest-income households.
Compared with other legislation, this bill is notable because it’s so regressive — while neither reducing the deficit nor supercharging growth, according to analysts across the political spectrum.
“This bill definitely compromises too much on growth, and it doesn’t make smart use of tax cuts either,” said Erica York, vice president for federal tax policy at the Tax Foundation, a research group that generally favors lower taxes. “If you look at the revenue cost, it’s really large. If you look at the economic impact, it’s not that meaningful.”
Regressive bills
Since 1990, there have been a couple of other major bills that leave the poor worse off, but they differ from the current proposal in key ways.
The current bill cuts health care spending, food assistance and other programs that benefit the poor, in addition to extending tax cuts for individuals that passed in 2017. Those 2017 tax changes, on average, benefited all income groups, but were skewed toward higher earners. New tax policies in the current bill would shift those benefits up the income scale even more. And some new tax provisions that would help lower-income households — like no tax on tips and no tax on overtime — would expire after a few years, while many benefits for high earners would be made lasting.
“That makes this specific episode kind of exceptional,” said Owen Zidar, a Princeton economist. “We just don’t usually have big tax cuts running in different directions from the bottom than at the top.”
Mr. Zidar noted that one tax provision that mostly benefits the rich — an expansion of the tax deduction for certain types of business income — is estimated to cost about as much as the bill’s major reductions in Medicaid spending would save.
Republicans’ attempted repeal of Obamacare (2017, not enacted)
Bottom earners would lose; top earners would gain
The legislation that looks the most like the current bill is the Republican effort to repeal and replace Obamacare in 2017. A bill that passed the House would have reduced spending on Medicaid for the poor and would have redistributed tax credits for health insurance up the income scale. It also would have reduced the federal deficit, whereas the 2025 House-passed bill is projected to add about $3 trillion to it over the next decade, when interest is included. The 2017 repeal bill, which was unpopular with the public, did not become law.
Like the repeal effort, the current bill includes big cuts to Medicaid and changes to Obamacare marketplaces that would disadvantage lower-income workers.
Clinton tax and budget acts (1997)
It’s unclear how bottom earners would be affected. Top earners would gain.
A pair of bipartisan bills enacted together in 1997, the Balanced Budget Act and the Taxpayer Relief Act, were designed to balance the federal budget. The legislation aimed to limit growth in Medicare expenses and created the Children’s Health Insurance Program and the Child Tax Credit. The tax package also included other tax cuts that helped higher-income families. Hard-to-measure changes to health programs, such as reduced payments to hospitals that treat Medicaid patients, left its full effect on the poor less clear.
Welfare reform act (1996)
Bottom earners would lose; top earners would see no change
Note: Estimated average percentage change in after-tax income for a year when the law was fully in effect. Groups are based on income adjusted for family size.
The welfare reform reconciliation bill passed in 1996 did appear at the time to reduce after-tax incomes for poor Americans.
“People are likening this to welfare reform,” said Heather Hahn, an associate vice president at the Urban Institute who studies welfare policy. But she added that they’re quite different, for one major reason: “That ’96 bill was not tied to big tax cuts for anybody else.”
Progressive bills
Budget bills with the opposite shape — larger gains at the bottom and tax increases at the top — have tended to come during Democratic presidencies.
Inflation Reduction Act (2022)
Bottom earners would gain; top earners would lose
Note: Estimated average percentage change in after-tax income in 2023. Groups are based on expanded cash income levels. Does not include the effects of additional I.R.S. funding or changes to prescription drug policies.
The Biden administration oversaw several such bills. The Inflation Reduction Act, passed in 2022, expanded clean energy subsidies and health insurance subsidies for the middle class, and paid for the changes partly with reductions on prescription drug prices. Our chart shows the distributional effects in the first year after passage. By the end of the decade, the bill’s effects were projected to become less progressive, since the insurance subsidies are scheduled to expire at the end of this year.
Build Back Better (2021, not enacted)
Bottom earners would gain; top earners would lose
Note: Estimated average percentage change in after-tax income in 2022 stemming from tax provisions in the bill. Groups are based on expanded cash income levels.
The Inflation Reduction Act was a scaled-back version of “Build Back Better,” President Biden’s signature domestic policy priority that never became law. It would have expanded social spending, benefiting lower-income Americans, and paid for much of it through higher taxes on corporations and high earners. Many of the proposed benefits for low-income Americans — including for child care, paid family leave and home health care — are not reflected in the chart, suggesting that this group may have gained even more than what’s shown.
Affordable Care Act (2010)
Bottom earners would gain; top earners would lose
The 2010 Affordable Care Act passed under President Barack Obama vastly expanded spending on health care for poor and middle-class Americans, and paid for it through higher payroll taxes on high earners, taxes on expensive employer health insurance and cuts to Medicare spending on hospitals and private insurance. While no one published a formal distributional analysis of the bill around the time it passed, severalsubsequent studies have measured its effects. Ultimately, several of the taxes that were originally projected to help reduce the deficit were repealed, mostly during the first Trump administration.
Clinton budget act (1993)
Bottom earners would gain; top earners would lose
Note: Estimated average percentage change in after-tax income in 1998. Groups are based on income adjusted for family size.
A 1993 budget bill under Bill Clinton combined spending cuts with additional tax increases, particularly for the wealthy. It also increased the earned-income tax credit.
George H.W. Bush tax act (1990)
Bottom earners would gain; top earners would lose
The bill George H.W. Bush signed into law in 1990 raised taxes across the board, but boosted the earned-income tax credit for low-income workers.
Regressive bills that would benefit all groups
Several presidents have signed major tax cut bills that benefited Americans across the income spectrum while vastly increasing the deficit.
First Trump tax cuts (2017)
Bottom earners would gain; top earners would gain most
Note: Estimated average percentage change in after-tax income in 2018. Groups are based on expanded cash income levels. The effects were projected to be smaller across income groups by 2025. Does not include effects of repealing the Affordable Care Act’s individual mandate.
“On average, that’s been the pattern: that big tax cut bills help everyone,” said Benjamin Page, a senior fellow with the Urban-Brookings Tax Policy Center, which produced many of the analyses shown here.
The bill before Congress today, which breaks that pattern, extends many provisions of major tax legislation passed during President Trump’s first term, which are set to expire at the end of the year. The benefits of that bill also skewed toward the wealthy, although to a lesser degree than the current bill.
Obama tax cut extension (2013)
Bottom earners would gain; top 20 percent would gain most
Note: Estimated average percentage change in after-tax income in 2013. Groups are based on cash income levels. Excludes the effects of certain business provisions.
In 2013, President Obama extended most of the tax cuts that had passed under George W. Bush and were due to expire. But the bipartisan tax bill he oversaw eliminated a tax cut for top earners.
George W. Bush tax cuts (2001 and 2003)
Bottom earners would gain; top earners would gain most
Note: Estimated average annual percentage change in after-tax income when laws were fully implemented. Groups are based on cash income levels.
The original major tax cut bills from the George W. Bush administration delivered an even greater share of benefits to the highest earners than the current bill would. But unlike the Trump bill, the Bush tax cut did not cut benefits to the poor. That made the laws regressive, but no group looked worse off.
The cases of emergency stimulus
One other major category of bills has come during times of acute economic stress, when the government temporarily increases spending, often disproportionately aimed at providing assistance to the poor. This happened during the Great Recession in the late 2000s and the Covid pandemic. Those major stimulus bills had no losing group.
Distributional data is limited in showing the full effects of the 2009 Obama stimulus and the 2021 American Rescue Plan, the largest of several pandemic relief bills. Both increased funding for unemployed workers, expanded spending on health care and made investments in infrastructure.
Those bills made an explicit trade-off that it was worth adding to the deficit during a time of crisis. But no such trade-off exists today: The 2025 bill, in addition to its regressivity, adds to the deficit amid a much healthier economy.
About the data
We collected distributional analyses for major tax and social welfare bills dating to the 1990s (most were also reconciliation bills). For consistency, we included only charts for those analyses that looked at the effects of most provisions of a bill on after-tax income, though income is not always measured in exactly the same way.
Sources for each chart are listed. Most came from the Tax Policy Center.
Some analyses looked only at the change in taxes or in pre-tax income resulting from a bill, and we used that information to characterize its distributional patterns in our tables.
