Key Points
We consider an illustrative scenario where tax provisions approved by the House Ways and Means Committee are made permanent, which we estimate will increase primary deficits by $5,583 billion ($5.6 trillion) over 10 years. Permanent spending increases from three other committees increase primary deficits by another $633 billion. These changes are partly offset by spending cuts of $1,791 billion, for a total conventional cost of $4,425 billion.
Despite increasing debt by 9.9 percent in 10 years and 21.9 percent in 30 years, GDP remains mostly flat, eventually slightly decreasing by 0.2 percent in 30 years. The average wage falls by about 0.3 percent over the next 30 years. Primary deficits are higher than conventional --- rising to $4,553 billion --- in the budget window when accounting for economic dynamics, due to microeconomic responses and compositional effects described in the brief.
The lack of a large fall in GDP despite much higher debt is partly driven by improvements to investments as well as increases in savings and labor supply, as households face a weaker social safety net associated with reductions in spending. On a conventional basis, households in the first income quintile lose about $820 in 2026, reflecting net reductions in taxes and transfers, including cuts to Medicaid and SNAP. The top 10% of the income distribution receives about 65 percent of the total value of the legislation. (Under current law, the top 10 percent of the income distribution pays about 70 percent of all federal taxes).
On a dynamic lifetime basis, lower-income households are worse off, with losses averaging $30,000 in lifetime value for the lower-income working-age population. All future households are worse off, including those who enter the economy with relatively higher productivity.
The House-Passed Reconciliation Bill: Illustrative Budget, Economic, and Distributional Effects with Permanence
PWBM previously estimated that the reconciliation bill passed by the House of Representatives would increase primary deficits by $2,787 billion ($2.8 trillion) over the 2025 to 2034 budget window. That score reflects the current legislation as written, which includes several temporary tax provisions and spending increases set to sunset (expire) within a few years of enactment. In the current brief, we consider the effects of making these temporary tax and spending provisions permanent under an illustrative alternative scenario.
Table 1 summarizes the deficit effects of each House committee’s proposals if all temporary tax and spending changes were made permanent. PWBM estimates that, if enacted permanently, the bill would increase primary deficits by $4.4 trillion from 2025 to 2034.
| Committee | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | Total, 2025-2034 budget window |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Ways and Means | 148 | 624 | 622 | 614 | 564 | 549 | 563 | 570 | 661 | 670 | 5,583 |
| Armed Services | 2 | 40 | 42 | 43 | 45 | 46 | 48 | 49 | 51 | 52 | 419 |
| Homeland Security | 1 | 5 | 8 | 11 | 15 | 15 | 16 | 16 | 17 | 18 | 122 |
| Judiciary | 0 | 2 | 4 | 9 | 12 | 12 | 13 | 13 | 13 | 14 | 92 |
| Financial Services | 0 | 0 | 0 | 0 | 0 | -2 | -1 | -1 | -1 | -1 | -5 |
| Oversight and Government Reform | 0 | 0 | 0 | -1 | -1 | -2 | -2 | -2 | -2 | -3 | -13 |
| Natural Resources | 0 | 0 | -1 | -1 | -1 | -2 | -2 | -3 | -3 | -4 | -18 |
| Transportation and Infrastructure | -1 | 0 | 0 | 0 | 0 | -3 | -5 | -7 | -9 | -12 | -37 |
| Agriculture | 0 | -12 | -16 | -30 | -30 | -29 | -28 | -31 | -31 | -31 | -238 |
| Education and Workforce | -198 | -14 | -13 | -13 | -16 | -18 | -19 | -19 | -19 | -20 | -349 |
| Energy and Commerce | -1 | -30 | -85 | -111 | -124 | -142 | -162 | -170 | -157 | -148 | -1,130 |
| Total change in the primary deficit | -49 | 614 | 561 | 522 | 462 | 425 | 420 | 416 | 518 | 534 | 4,425 |
Notes: PWBM has estimated the effects of making temporary provisions permanent for the Ways and Means, Armed Services, Homeland Security, and Judiciary Committees. Other committees do not have significant temporary provisions.
Estimates for all committees except Ways and Means are based on cost estimates from the Congressional Budget Office.
Sources: Penn Wharton Budget Model, Congressional Budget Office.
PWBM estimates that permanently enacting the House Ways and Means Committee’s tax proposals would reduce revenues by $5.6 trillion over the budget window, compared with $4.3 trillion in lost revenue with the sunsets written into the actual bill.1 If temporary increases in spending under the Armed Services, Judiciary, and Homeland Security Committees’ jurisdictions were continued permanently, they would add another $633 billion to primary deficits, more than twice the amount of spending authorized by those committees in the actual bill. Net spending cuts or revenue increases from all other committees amount to $1.8 trillion in total, offsetting less than one third of the $6.2 trillion increase in deficits from permanent tax cuts and spending increases.
Table 2 reports the revenue effects of the House Ways and Means Committee tax proposals if all temporary provisions were made permanent. Provisions with sunsets in the bill include expansions of the standard deduction and child tax credit, new tax benefits for specific forms of income, and restoration of the TCJA’s bonus treatment of business investment.
| Provision | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | Total, 2025-2034 budget window |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Extend TCJA individual & estate tax provisions | * | -346 | -382 | -397 | -397 | -400 | -414 | -429 | -446 | -461 | -3,671 |
| Restore TCJA business and international tax provisions | -69 | -119 | -131 | -115 | -94 | -85 | -86 | -83 | -85 | -88 | -954 |
| Expand TCJA individual & estate tax provisions | -16 | -74 | -86 | -90 | -92 | -94 | -97 | -102 | -106 | -112 | -867 |
| Expand TCJA business and international tax provisions | -5 | -10 | -11 | -14 | -14 | -13 | -14 | -14 | -9 | 21 | -83 |
| New individual tax provisions | -58 | -104 | -78 | -83 | -88 | -93 | -96 | -99 | -101 | -104 | -904 |
| Repeal or modify energy and clean vehicle tax credits | * | 26 | 60 | 79 | 109 | 124 | 130 | 140 | 66 | 53 | 786 |
| Other tax provisions (JCT) | * | 2 | 6 | 6 | 11 | 12 | 14 | 17 | 20 | 21 | 110 |
| Total change in revenues | -148 | -624 | -622 | -614 | -564 | -549 | -563 | -570 | -661 | -670 | -5,583 |
* = less than $500 million.
Note: Provisions in the "Other tax provisions" category were not modeled by PWBM; estimates are from the Joint Committee on Taxation (JCT), adjusted to reflect subsequent updates to the bill.
Source: Penn Wharton Budget Model, Joint Committee on Taxation.
Below, we summarize the major provisions and new tax proposals from the Ways and Means Committee. For detailed explanations of its provisions, see the Joint Committee on Taxation. Appendix Table 1 (at the end of this report) presents detailed revenue estimates for these proposals.
Relative to our analysis posted on May 23, 2025 of the actual legislation, we denote changes that are made permanent with an [*] in the bullet title.
Extend TCJA individual and estate tax provisions: Extending the TCJA would retain the current individual income tax rates, tax brackets, standard deduction, limits on itemized deductions, tax credits, estate tax exemption, and other tax parameters in place since TCJA went into effect. See our previous analysis of the House reconciliation proposals and TCJA extension for additional details. For provisions of the TCJA that are expanded or altered under the Ways and Means proposal (such as the section 199A deduction for pass-through businesses and the cap on state and local tax (SALT) deductions), we consider those expansions separately and estimate their effects relative to extension of the original version in the TCJA.
Restore TCJA business and international tax provisions [*]: The bill would temporarily restore the cost recovery rules initially in place under the TCJA, including the special bonus depreciation deduction for qualified investment, the immediate deductibility of research and experimentation costs, and the more relaxed net interest limitation based on income before interest, taxes, depreciation, and amortization. These restored benefits expire after 2029 in the actual legislation but are modeled as permanent herein. The bill would also permanently maintain the section 250 deduction and effective statutory tax rates on global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII) close to their current levels (they are set to rise in 2026 under current law) and maintain a lower rate in the base erosion and anti-abuse tax (BEAT).
Expand TCJA individual and estate tax provisions:
Provide an additional year of inflation adjustment for some ordinary tax bracket thresholds: For all but the top two ordinary rate bracket thresholds (i.e. the 35 percent and 37 percent bracket), the bill provides an additional year of inflation adjustment, setting the base year for calculating the adjusted value to 2016, rather than 2017. This produces bracket thresholds that are higher than they otherwise would be, relative to a simple extension of the TCJA.
Enhanced standard deduction [*]: The bill provides an additional year of inflation adjustment for the standard deduction, beginning in the calendar year 2026. This produces a standard deduction that is higher than it would be otherwise, relative to a simple extension of the TCJA. In addition, the bill provides for a temporary enhancement to the standard deduction, institutes a bonus amount to the standard deduction of $2000 for joint returns, $1500 for head of household returns, and $1000 for all others. This bonus amount begins in tax year 2025, is not indexed for inflation, and expires after 2028 in the actual legislation but is modeled as permanent herein.
Enhanced child tax credit [*]: The bill temporarily increases the value of the child tax credit from a nominal $2000 to a nominal $2500 per child. This increase begins in tax year 2025 and expires after 2028. In the actual legislation, after 2028, the child tax credit reverts to the TCJA value of $2000 per child. In 2029 and thereafter, the value of the credit is adjusted for inflation, using 2024 as a base year. It is modeled as a permanent credit of $2,500 indexed for inflation after 2028 (using a 2028 base year) herein.
Enhanced deduction for qualified business income: The bill provides for a permanent enhancement to the section 199A deduction for qualified business income beginning in tax year 2026, increasing the deduction rate from 20 percent to 23 percent of qualified business income (relative to a simple TCJA extension). It also modifies the rules dictating the limitation of qualified business income based on income and business type/characteristics, relative to a simple TCJA extension.
Enhanced estate tax exemption: The bill permanently increases the estate tax exemption to $15 million (up from $10 million in 2017 dollars under a simple TCJA extension), beginning in tax year 2026. This amount is indexed for inflation thereafter.
Expand TCJA business and international tax provisions [*]: The bill would increase the limits on immediate expensing of investment under section 179 and temporarily expand the special bonus depreciation deduction to structures used in production activities. The expanded bonus depreciation sunsets after 2028 in the actual legislation but is modeled as permanent herein.
New individual tax provisions:
Limit itemized deductions: The bill institutes a new limit on itemized deductions beginning in tax year 2026. This limitation applies to filers with taxable income that exceeds the 37 percent ordinary rate threshold for their filing status and reduces the allowable non-SALT itemized deductions by 2/37 of the amount by which taxable income exceeds this threshold (or the total amount of itemized deductions, whichever is smaller). A similar limit, with a larger reduction, is applied to SALT deductions (described below).
No tax on tips [*]: The bill provides a temporary deduction for qualified tip income, available to all filers regardless of itemizing status, beginning in tax year 2025. The bill sets general guidelines for forthcoming regulations governing what constitutes qualified tip income. These guidelines are intended to limit the occupations for which tipped income will qualify for the deduction. The deduction is limited to non “highly compensated employees,” generally individuals making less than $160,000 per year in 2025 dollars. This deduction ends after 2028 in the actual legislation but is modeled as permanent herein.
No tax on overtime [*]: The bill provides a temporary deduction for the bonus amount of eligible overtime pay, available to all filers regardless of itemizing status, beginning in tax year 2025. The deduction only applies to overtime covered by the Fair Labor Standards Act, and is limited to non “highly compensated employees,” like the tip income deduction. This deduction ends after 2028 in the actual legislation but is modeled as permanent herein.
Additional deduction for seniors [*]: The bill provides a new temporary bonus deduction for all individuals who have attained the age of 65. This deduction is $4,000 per individual and phases out at a rate of 4 percent of AGI over $150,000 for married taxpayers filing jointly, or $75,000 for all other filers. This deduction is available to all qualifying taxpayers regardless of filing status beginning in tax year 2025, and it expires after 2028 in the actual legislation but is modeled as permanent herein.
No tax on auto loan interest [*]: The bill provides a temporary deduction for qualified passenger vehicle loan interest beginning in 2025. The bill outlines several restrictions on what constitutes qualified auto loan interest. It also limits the total deductible amount to $10,000 per year, or 20 percent of the taxpayer’s AGI more than $100,000 ($200,000 for married taxpayers filing jointly), whichever is lower. This deduction expires after 2028 in the actual legislation but is modeled as permanent herein.
Charitable deduction for non-itemizers [*]: The bill provides a temporary deduction for charitable contributions, available to non-itemizers. This deduction is limited to $300 for married taxpayers filing jointly, and $150 for all other filers. It is available beginning in tax year 2025 and expires after 2028 in the actual legislation but is modeled as permanent herein.
Permanently increase the SALT deduction cap to $40,000 [*]: In the 2017 TCJA, the previously unlimited individual state and local tax (SALT) deduction was capped at $10,000, meaning itemizers could only claim a maximum of $10,000 of their state and local tax liability as a deduction.2 This bill provides a permanent new SALT deduction cap of $40,000.3 This cap phases out at a rate of 30 percent of adjusted gross income over $500,000, to a minimum cap of $10,000.4 The allowable deduction after the cap is further reduced using a formula similar to the new itemized deduction limit described above, but at a higher rate of 5/37 of each dollar over the 37 percent bracket. Starting in 2026, the applicable cap and phase out thresholds grow by 1 percent each year. In the actual legislation, this continues through 2033 and the thresholds then remain constant, but it is modeled as permanent 1 percent annual growth herein.
Alternative Minimum Tax Inflation Adjustment: The 2017 TCJA set higher exemptions and exemption phase out thresholds for the Alternative Minium Tax (AMT).5 It indexed these thresholds for inflation, with a base year of 2017. This bill, along with extending the TCJA AMT parameters, resets their nominal value in 2026, effectively “resetting” the inflation adjustments that occurred since the TCJA passed, and inflation adjusts them using a 2025 base year thereafter. This lowers the exemption and phase out thresholds, and therefore subjects more income to the AMT, relative to a simple TCJA extension.
Repeal or modify energy and clean vehicle tax credits: The bill eliminates or substantially limits several tax credits designed to encourage investment and production of clean energy, alternative fuels, and electric vehicles. A number of these credits created or expanded under the Inflation Reduction Act of 2021. They include credits for individuals (such as clean vehicle and residential efficiency credits) and businesses (such as energy production and manufacturing credits).
Table 1 also shows the deficit reduction achieved by committees instructed to reduce spending or increase non-tax revenues. Below, we summarize the major spending reductions proposed by various committees.
Changes to Medicaid and Health Insurance Marketplaces: The Energy and Commerce Committee’s proposal includes changes to major federal health programs. It would cut Medicaid spending by imposing work requirements for able-bodied adults without dependents, increasing eligibility checks to twice a year, reducing the Federal Medical Assistance Percentage (FMAP) for states covering undocumented immigrants, introducing cost-sharing for Medicaid expansion enrollees, banning new or increased provider taxes used to draw federal funds, and capping provider payments at Medicare rates. It would also codify proposed changes to the federally subsidized Health Insurance Marketplaces that would reduce participation in the Marketplaces. These proposals would reduce the deficit by more than $900 billion over the budget window.
Changes to the Supplemental Nutrition Assistance Program (SNAP): The Agriculture Committee’s proposal would reduce spending on SNAP by more than $290 billion over ten years. But it would increase farm subsidies by around $60 billion, for a total net effect of $230 billion for Agriculture. The bill would shift a significant portion of SNAP benefit costs to states with a new cost-sharing formula linked to payment error rates. It would also create additional work documentation requirements, limit the growth of the Thrifty Food Plan, shift administrative costs to states, and make other changes to reduce federal SNAP costs.
Changes to student loans: The Education and Workforce Committee’s proposal would eliminate subsidized and income-driven loan repayment plans, impose new overall limitations on student borrowing, and tighten Pell Grant eligibility. Altogether, the Education and Workforce Committee’s proposal would reduce spending by $350 billion over the budget window. Under federal budget accounting rules, the lifetime subsidy costs of student loans are measured on an accrual basis and recorded up front. As a result, almost $200 billion of the Committee’s total savings are recorded in the budget immediately in Fiscal Year 2025.
Table 3 reports the total conventional-basis cost of legislation of $4,425 billion over 10 years. Including dynamic effects does not reduce the legislative costs despite small, positive increases in GDP over the first decade, reported in Table 4 and discussed below. The actual savings from economic growth do not appear until 2033 and 2034 and are not enough to overcome higher costs in earlier years in the 10-year budget window. After 2033, the dynamic costs fall relative to conventional, a difference which persists until 2054.
| 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | Total, 2025-2034 budget window | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Conventional | -49 | 614 | 561 | 522 | 462 | 425 | 420 | 416 | 518 | 534 | 4,425 |
| With Dynamic Effects | -67 | 616 | 576 | 541 | 492 | 457 | 451 | 446 | 517 | 524 | 4,553 |
Source: Penn Wharton Budget Model
Before 2033, two primary factors increase the dynamic costs relative to conventional:
First, some households that would otherwise have lost Medicaid without dynamics re-acquire access with dynamics by reducing their hours worked.
Second, despite increasing the number of hours worked in response to the legislation (Table 4), firm-level total wage bills are often flat or negative due to compositional effects. Specifically, lower-wage workers increase their hours worked, especially due to a reduction in the social safety net spending programs. However, higher-income households reduce their hours worked, as income effects slightly dominate substitution effects after reductions in marginal tax rates. While total productivity-weighted hours increase, lower-income households pay taxes at a lower marginal tax rate than higher-income households.
PWBM’s dynamic model --- an overlapping-generations (OLG) lifecycle model with uninsurable idiosyncratic risks --- allows us to capture these two effects in detail. Without this framework, the positive response to labor and savings from an increase in uninsurable risk could not be properly incorporated against the negative effects of more government debt. Moreover, the OLG model captures the microeconomic effects associated with Medicaid enrollment and the tax compositional effects noted above, which are important for explaining why 10-year costs with positive dynamics need not be smaller than conventional costs.
Table 4 reports the economic effects of the legislation over the next 30 years. By 2034, Gross Domestic Product (GDP) is projected to be 0.1 percent higher than under current law, while the capital stock will be 0.2 percent lower, and federal debt will increase by 9.9 percent. Work hours are expected to rise by 1.1 percent, even as wages fall by 0.3 percent. Despite higher debt and lower wages, the increase in labor supply reflects that households are less protected from health and income shocks due to cuts to Medicaid and SNAP. As a result, they work longer hours and increase precautionary savings. However, a much higher level of debt crowds out more capital than in our previous analysis of the bill, so that the capital stock is now lower when the spending and tax changes are made permanent.
| 2034 | 2039 | 2044 | 2049 | 2054 | |
|---|---|---|---|---|---|
| Gross domestic product | 0.1 | 0.0 | -0.1 | -0.3 | -0.2 |
| Capital stock | -0.2 | -0.3 | -0.4 | -0.6 | -0.7 |
| Hours worked | 1.1 | 0.9 | 0.7 | 0.5 | 0.5 |
| Average wage | -0.3 | -0.3 | -0.3 | -0.3 | -0.3 |
| Consumption | 1.6 | 1.7 | 1.7 | 1.5 | 1.2 |
| Debt held by the public | 9.9 | 13.2 | 16.2 | 19.1 | 21.9 |
Source: Penn Wharton Budget Model
Over the next 30 years, the House reconciliation bill decreases GDP growth slightly, and GDP would be 0.2 percent lower in 2054 than under current law. That decrease in growth is driven entirely by a 0.7 percent decrease in the capital stock, as hours worked increase. At the same time, making permanent the spending and revenue provisions in the House reconciliation bill increases debt by 21.9 percent over the next 30 years.
Table 5 reports conventional-basis distributional effects by income quintile as the percentage change in income after changes in taxes and government spending. The average household in the lowest quintile – with a household income between $0 and $16,999 – would lose about $820 under the House reconciliation bill in 2026. That figure represents a 14.6 percent loss in average income for that group and a 5.7 percent reduction in the median income for that group. Households with incomes between $17,000 and $50,999 would lose $430 on average.
| Income group | 2026 | 2030 | 2033 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Lower cutoff for income group | Average change in after-tax-and-transfer income | Average percent change in after-tax-and-transfer income | Median percent change in after-tax-and-transfer income | Lower cutoff for income group | Average change in after-tax-and-transfer income | Average percent change in after-tax-and-transfer income | Median percent change in after-tax-and-transfer income | Lower cutoff for income group | Average change in after-tax-and-transfer income | Average percent change in after-tax-and-transfer income | Median percent change in after-tax-and-transfer income | |
| First quintile | 0 | -820 | -14.6% | -5.7% | 0 | -1,080 | -6.1% | -4.8% | 0 | -1,165 | -5.3% | -3.9% |
| Second quintile | 17,000 | -430 | -1.1% | -0.8% | 20,000 | -565 | -1.0% | -0.2% | 22,000 | -585 | -0.9% | -0.2% |
| Middle quintile | 51,000 | 840 | 1.1% | 1.2% | 58,000 | 1,235 | 1.5% | 1.6% | 63,000 | 1,435 | 1.6% | 1.7% |
| Fourth quintile | 93,000 | 3,000 | 2.2% | 2.1% | 105,000 | 4,030 | 2.7% | 2.6% | 115,000 | 4,565 | 2.8% | 2.7% |
| 80-90% | 174,000 | 5,515 | 2.6% | 2.5% | 195,000 | 6,595 | 2.8% | 2.7% | 214,000 | 7,100 | 2.8% | 2.6% |
| 90-95% | 263,000 | 7,575 | 2.4% | 2.2% | 296,000 | 8,950 | 2.5% | 2.4% | 324,000 | 9,940 | 2.5% | 2.5% |
| 95-99% | 388,000 | 17,860 | 3.1% | 3.2% | 436,000 | 18,670 | 3.0% | 3.2% | 477,000 | 20,295 | 3.0% | 3.2% |
| 99-99.9% | 988,000 | 41,130 | 2.3% | 2.1% | 1,101,000 | 35,520 | 1.9% | 1.6% | 1,205,000 | 39,190 | 1.9% | 1.6% |
| Top 0.1% | 4,325,000 | 392,345 | 3.1% | 2.8% | 4,763,000 | 182,205 | 1.7% | 1.6% | 5,194,000 | 210,500 | 1.8% | 1.6% |
Source: Penn Wharton Budget Model
Most of the gains for the top 0.1% derive from a boost to corporate profits from restoring the TCJA’s original cost recovery regime and maintaining lower tax rates for multinationals.
Dynamic distributional analysis considers how a policy affects households across the income and age distribution, including the unborn (represented by a negative age index at the time of the reform). It asks how much, on average, households in each (income, age) bucket value the proposed policy change over their entire lifetime, represented as a one-time transfer at the time of the policy change. Dynamic distributional analysis is the standard in academic research, where conventional analysis is rarely used due to several key limitations that dynamic analysis addresses. It is also the natural welfare metric of the OLG lifecycle model with uninsurable risk, which is the paradigm model in economics for modeling the bidirectional equilibrium relationship between microeconomic and macroeconomic responses to a policy change.
Note: "Gross Income" refers to each household's income in the year of the policy change. We categorize households not yet in the labor force (ages 20 and younger) by their gross income in the year they enter the labor force.
Source: Penn Wharton Budget Model
Table 6 reports policy “equivalent variations” for the same cases and versions reported in Table 4. A positive equivalent variation means that the person would be better off under the policy reform; a negative equivalent variation means that the person would be worse off under the policy reform. For example, as shown in Table 6, a household aged 30 in the 20th to 40th percentile of the income distribution loses about $11,700 of value from this policy bundle, as shown by the negative value. Put differently, this household is indifferent between adopting this policy bundle and losing a one-time payment of $11,700 without this policy change. However, a household aged 30 in the top 20th percentile of income gains an equivalent of $31,000. This household would be indifferent between this policy bundle and a one-time payment of $31,000 to avoid adopting this bundle.
Table 6 shows that households most affected by the cuts to Medicaid and SNAP—those in the bottom income quintile—experience the largest losses under this bill, averaging $30,000 in lifetime value for the working-age population. In contrast, working-age households in the top income quintile generally benefit from lower taxes, gaining an average of $48,500. Working-age households in the middle of the income distribution are, on average, mostly unaffected; however, outcomes vary significantly. Some gain up to $10,200, while others lose as much as $9,200 in lifetime value, depending on their likelihood of needing to use the reduced spending programs. All future generations are projected to face lifetime losses, ranging from $12,700 for low-income households to $100 for high-income households. These losses are primarily driven by a weakened social safety net and increased government debt.
This appendix provides detailed revenue estimates for the House Ways and Means Committee’s tax proposals under the permanence scenario.
| Provision | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | Total, 2025-2034 budget window | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| TCJA extension and restoration | ||||||||||||
| Individual and estate tax provisions | * | -345.9 | -382.4 | -396.8 | -397.3 | -399.8 | -414.0 | -428.5 | -445.6 | -461.1 | -3671.4 | |
| Business and international tax provisions | -68.9 | -118.6 | -130.6 | -115.1 | -93.9 | -84.6 | -86.1 | -83.2 | -84.8 | -87.6 | -953.6 | |
| TCJA expansion | ||||||||||||
| Ordinary tax rate inflation adjustment | * | -7.7 | -9.5 | -10.0 | -10.4 | -10.9 | -11.4 | -11.8 | -12.3 | -12.8 | -96.8 | |
| Expanded standard deduction | -4.2 | -25.1 | -30.2 | -31.8 | -32.1 | -32.5 | -33.6 | -34.8 | -34.3 | -35.7 | -294.3 | |
| Expanded child tax credit | -12.2 | -22.9 | -23.3 | -24.2 | -24.5 | -24.8 | -25.4 | -28.3 | -30.7 | -33.6 | -249.9 | |
| Expanded section 199A deduction | * | -17.7 | -21.4 | -22.2 | -22.9 | -23.7 | -24.6 | -25.5 | -26.5 | -27.4 | -211.9 | |
| Increase in estate tax exemption | * | -0.4 | -1.5 | -1.6 | -1.6 | -1.6 | -1.8 | -1.9 | -1.9 | -2.0 | -14.3 | |
| Temporary bonus depreciation for production structures | -3.9 | -5.4 | -5.7 | -5.8 | -5.8 | -5.9 | -6.1 | -6.1 | -6.2 | -6.3 | -57.0 | |
| Increase section 179 limitations | -0.9 | -1.0 | -0.7 | -0.5 | -0.4 | -0.3 | -0.3 | -0.2 | -0.2 | -0.2 | -4.6 | |
| Other business expansions | * | -3.4 | -4.9 | -7.7 | -7.3 | -7.2 | -7.3 | -7.4 | -2.8 | 27.1 | -21.0 | |
| New individual tax provisions | ||||||||||||
| Limit itemized deductions | * | 1.8 | 4.3 | 4.4 | 4.6 | 4.8 | 5.0 | 5.2 | 5.4 | 5.6 | 41.1 | |
| No tax on tips | -4.8 | -5.2 | -5.5 | -5.7 | -6.0 | -6.1 | -6.4 | -6.7 | -7.0 | -7.4 | -60.8 | |
| No tax on overtime | -35.0 | -44.3 | -46.6 | -48.4 | -50.2 | -51.7 | -53.4 | -54.9 | -56.5 | -58.2 | -499.2 | |
| Provide additional deduction for seniors | -10.2 | -17.7 | -17.9 | -18.2 | -18.5 | -18.7 | -18.9 | -18.9 | -19.0 | -19.0 | -177.0 | |
| No tax on auto loan interest | -0.2 | -6.2 | -8.0 | -9.9 | -11.9 | -13.7 | -14.3 | -14.5 | -14.8 | -15.1 | -108.6 | |
| Charitable deduction for nonitemizers | -0.1 | -0.7 | -0.8 | -0.8 | -1.3 | -2.6 | -2.5 | -2.7 | -2.6 | -2.7 | -16.8 | |
| Cap state and local tax deductions at $40,000 | -7.6 | -31.6 | -31.5 | -32.9 | -34.4 | -36.0 | -37.5 | -38.8 | -40.4 | -42.0 | -332.7 | |
| Inflation adjustment in AMT | * | * | 27.9 | 28.9 | 29.8 | 30.8 | 31.6 | 32.6 | 33.6 | 34.7 | 249.9 | |
* = less than $500 million.
Source: Penn Wharton Budget Model
-
These figures include some changes in outlays. ↩
-
The cap for married individuals filing separately is $5,000 under the 2017 TCJA, $10,000 for all other filers. ↩
-
$20,000 for married individuals filing separately ↩
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For married individuals filing separately, the phaseout threshold amount and minimum cap are $250,000 and $5,000, respectively. ↩
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The TCJA AMT exemption is $109,400/$70,300 (married filing jointly/all other taxpayers) and the exemption phase out threshold is $1,000,000 ($500,000). ↩
Age 0 to 20 20 to 40 40 to 60 60 to 80 80 to 100 -20 -12700 -5300 -5300 -2000 -100 -10 -12100 -4700 -4700 -1600 600 0 -11700 -100 1300 12500 21400 10 -12900 2500 4600 19600 32400 20 -12600 1900 4900 22500 40600 30 -21900 -11700 -4300 12800 31000 40 -38200 -27400 -9200 1400 38500 50 -41900 -22200 -1700 19200 63000 60 -36700 -5800 10200 26800 69400 70 -33700 2500 20300 48700 114400
