TOPLINE:
The One Big Beautiful Bill (OBBB) reduced the projected growth of federal spending and cut corporate subsidies in the tax code. At the same time, it increased funding for the military, homeland security, and the judiciary.
BACKGROUND:
TCJA enacted many key tax reforms, but one big flaw was that many of the tax cuts were temporary. Most expirations would have occurred at the end of 2025, eight years after enactment, if OBBB hadn’t passed. That would have included changes to individual tax rates, the standard deduction, the Alternative Minimum Tax, the Child Tax Credit, the pass-through deduction, and the Death Tax. In addition, a key business provision, expensing for equipment and machinery, had already begun phasing out. In 2024, the Congressional Budget Office and Joint Committee on Taxation (JCT) estimated these added up to about $650 billion in tax increases (annual) from 2025 to 2026 (partly offset by about $300 billion in expiring pay-fors).
Facts and Figures
- According to CBO scoring, OBBB reduces net outlays by an estimated $1.1 trillion.
- The net reduction in outlays would be higher by about $190 billion if not for changes to refundable tax credits (e.g., child tax credit) and other tax outlays for individuals counted as increased outlays.
- OBBB also reduced corporate tax subsidies like Green New Deal tax credits by about $390 billion (net). CBO classifies these changes as tax increases.
Outlay Changes, by Committee (2025-34), $ Billions | |
Committee | Budget Impact |
Armed Services | +150 |
Homeland Security, Government Affairs | +129 |
Judiciary | +46 |
All Others | -1,416 |
Total | -1,091 |
BOTTOMLINE:
Between reduced outlays and reduced corporate tax subsidies, OBBB included more than $2 trillion in “pay-fors” (gross) and nearly $1.5 trillion on net. These reductions are among the largest ever in absolute terms, assuming Congress follows through and keeps the changes in place over the long term. Still, these changes pale in comparison to the national debt, which now exceeds $39 trillion.
This memo is part of the One Big Beautiful Booklet, a collection of more than 60 memos that examine and summarize the major aspects of the One Big Beautiful Bill – the signature legislative achievement of President Trump and the 119th Congress.
