The 2025 tax and spending law is renewing a basic question about federal priorities: Who gains from tax changes, and who bears the cost of reductions in public benefits? The Congressional Budget Office projects that households near the bottom of the income distribution will have fewer resources under the law, while households in the middle and at the top will have more.
President Donald Trump signed the law, formally Public Law 119-21, on July 4, 2025. A graphic circulating with this debate asks whether wealthy Americans should pay more when health care and food assistance face cuts. That is a question of policy and values. The budget office’s analysis can clarify the expected effects, but it does not measure whether any named billionaire will personally benefit.
What the 2025 tax and spending law changes
In its August 2025 distributional analysis, the nonpartisan budget office compared the enacted law with its January 2025 baseline. It estimated that households in the lowest tenth of the income distribution would lose about $1,200 in resources a year, on average, over 2026 through 2034. That equals about 3.1% of their projected income.
For households in the highest tenth, the projected gain is about $13,600 a year, on average, or 2.7% of projected income. Households around the middle of the distribution also show gains, though smaller in dollar terms. These are group averages, expressed in 2025 dollars, and are not a prediction of what any one family’s tax bill or bank balance will be.
The budget office said the decrease at the bottom is driven mainly by reduced in-kind benefits, including Medicaid and the Supplemental Nutrition Assistance Program, or SNAP. The increase at the top is driven mainly by lower federal taxes. Its accounting also assigns some changes in government spending to households, so the resource figures should not be described simply as cash paid to or taken from each family.
How Medicaid and SNAP change
In a February 2026 outlook, the budget office projected that the law’s changes to Medicaid eligibility, enrollment processes and financing would reduce Medicaid enrollment by 13.1 million people in 2035 relative to its earlier baseline. That figure measures enrollment in one program; it does not mean that all 13.1 million will be uninsured. Some may obtain another form of coverage.
In a separate estimate for the law’s Medicaid chapter, the agency projected 7.5 million more people without health insurance in 2034 compared with its January 2025 baseline. The estimate is subject to uncertainty about state implementation and how people respond to the new rules. It is a projection, not a count of people who have already lost coverage.
Food assistance is also affected. The budget office estimated that expanded SNAP work requirements and tighter rules for waivers would reduce participation by roughly 2.4 million people in an average month over 2025 through 2034. Other provisions change benefit calculations and shift some costs to states. The agency warned that the effects of individual provisions cannot simply be added together because the affected populations overlap.
The case for the law and its limits
The White House argues that the 2025 tax and spending law delivers tax relief to workers and families and encourages growth. It points to provisions on tips, overtime and the child tax credit. The budget office also projects that the law will increase the size of the economy relative to its prior baseline, while estimating a larger federal deficit over 2025 through 2034.
Critics focus on the distribution of those gains and costs. In the budget office’s household analysis, tax changes lift resources for higher-income groups while cuts to Medicaid and SNAP lower resources for many households at the bottom. Both parts of that finding matter: a broad statement that only wealthy people receive tax relief would misrepresent the report, as would a claim that benefit reductions have no effect on lower-income households.
The claim that working Americans can suffer is a political judgment supported in part by the projected losses in benefits and insurance coverage. A stronger claim that the law will cause a specific number of deaths is not established by these budget estimates. The most defensible conclusion is narrower: the agency projects uneven gains and losses, and the debate is over whether that trade-off is acceptable.
