America’s poorest households will see their incomes drop by $1,200 per year, while the country’s wealthiest will see an additional $13,600 annually, according to the Congressional Budget Office’s analysis of the impacts of President Donald Trump’s sweeping tax and domestic policy law.
The CBO’s updated distributional analysis provided more details on the effects of Trump’s hallmark legislative achievement that he signed into law in July. The law extended and made permanent certain tax cuts Congress passed during Trump’s first term, but significantly reduced federal spending on welfare programs like the Supplemental Nutrition Assistance Program and Medicaid.
Republicans claimed those provisions would not result in benefits cuts. The CBO’s analysis paints a very different reality.
The CBO estimates that the law will result in 1.3 million losing their health insurance in 2026, with 800,000 of those coming from changes to Medicaid policy and 500,000 coming from changes to policies related to the health insurance marketplace.
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That number rises to 5.2 million in 2027, 3.7 million of which would come from the changes to Medicaid policy. In 2034, 10 million would lose health insurance, with 7.5 million coming from the changes to Medicaid policy.
Overall, the CBO found that the law’s welfare cuts will reduce the resources of those in the lowest income brackets, while helping wealthier families.
The CBO found that the poorest tenth of households will lose 3.1% of their income annually between 2026 and 2034, compared to CBO’s January baseline projection. The CBO credited that loss as “mainly attributable to reductions in in-kind transfers, such as Medicaid and SNAP.”
Meanwhile, the CBO found that the middle of the income distribution will see resources increase by $800 to $1,200 per year. And the wealthiest tenth of households will have resource increases of $13,600 per year, credited to tax cuts. In all, the richest American households would gain 2.7% in annual income.
The CBO calculated estimates per provision for SNAP, acknowledging that groups may have overlap and so the losses are not overall figures. But the data still indicates Americans will lose their benefits.
The law expands work requirements for various groups, including able-bodied adults without dependents and those who live with children 14 or older, and removes exclusions to work requirements for veterans, the homeless and certain young adults who were previously in foster care. It also created new exclusions for Indigenous people. The CBO estimates that those provisions will result in 2.4 million fewer people per month receiving benefits from 2025 to 2034.
Another major food stamp provision in the law will see states, for the first time, paying out part of the benefit unless they reduce the rate at which they currently over- or underpay SNAP benefits. The CBO estimated that in an average month over from 2028 to 2034, states will reduce or eliminate benefits for 300,000 people. Average monthly subsidies that come via child nutrition programs specifically will decrease for around 96,000 children.
Republicans repeatedly dismissed the CBO’s findings while negotiating the budget bill. Democrats, meanwhile, have been campaigning against Republicans’ welfare cuts.
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