The 2025 federal tax and spending law is projected to increase resources for many households while reducing them for those near the bottom of the income distribution, according to the Congressional Budget Office (CBO). Its analysis considers tax changes alongside changes to Medicaid, food assistance and other spending.
The law was enacted on July 4, 2025. CBO’s distributional analysis compares its projected effects with a baseline prepared before the law passed. These figures are forecasts of average effects across groups, not amounts that every household will personally gain or lose.
What CBO projects for households
Across 2026 through 2034, CBO projects that households in the lowest tenth of the income distribution will have about $1,200 less in resources per year on average, measured in 2025 dollars. It attributes much of that decline to reduced benefits through programs including Medicaid and the Supplemental Nutrition Assistance Program (SNAP).
For households in the highest tenth, CBO projects an average increase of about $13,600 per year, also in 2025 dollars. That increase is mainly linked to lower federal taxes. CBO projects smaller average gains for households in the middle of the income distribution.
“Resources” in this analysis includes more than take-home pay. CBO combines estimated tax changes with the value of benefits and other government spending. It cautions that these effects do not all reach households in the same way.
Medicaid and health coverage
CBO’s February 2026 budget outlook projects that changes in the law will reduce Medicaid enrollment by 13.1 million people in 2035 compared with its baseline. That is an enrollment projection, not a count of deaths or a claim that every person will become uninsured.
In a separate estimate, CBO projected that the law’s Medicaid provisions would increase the number of people without health insurance by 7.5 million in 2034. The figures measure different outcomes in different years and should not be added together.
The political disagreement
The White House has described the law as tax relief and has argued that its Medicaid changes address waste, fraud and abuse. Critics argue that the projected losses in health and food-assistance resources for lower-income households should weigh more heavily in judging the law.
CBO’s estimates show how the law is expected to affect income groups on average. They do not establish that a particular billionaire received a specific tax break, or prove how many people may suffer a particular health outcome. Those claims would require separate evidence.
