Households' resources to rise under 'Big, Beautiful Bill,' but poorest to see income fall.

The Congressional Budget Office estimates that the "One Big, Beautiful Bill" will increase US households' resources from 2026-2034, but the effects are uneven, with higher-income households benefiting the most and the poorest households experiencing a decline in income.

The Congressional Budget Office (CBO) has released an updated analysis of the distributional effects of the "One Big Beautiful Bill" Act (H.R. 1), passed by the House on May 22, 2025. The CBO estimates that if the legislation is enacted, U.S. households will, on average, see an increase in resources over the 2026-2034 period. However, the changes will not be evenly distributed among households.

The CBO estimates that resources would decrease for households at the bottom of the income distribution, while resources would increase for households in the middle and top of the income distribution. The analysis includes most, but not all, provisions of H.R. 1 and excludes tax provisions not allocated in the Joint Committee on Taxation's (JCT) distributional analysis [1].

The CBO estimates that the budgetary effects of the legislation would affect household resources through four channels over the 2026-2034 period:

1. Federal taxes and cash transfers: These would increase household resources by $3.1 trillion, on net. Changes to federal tax provisions, such as extensions of provisions of the 2017 tax act and reductions in subsidies for health insurance under the Affordable Care Act, would affect household resources. Changes to student loan programs would also have an impact [1].

2. Federal and state in-kind benefits: These would decrease household resources by $1.0 trillion, primarily due to lower federal spending on benefits provided through Medicaid and SNAP. States' fiscal responses would increase household resources by $10 billion, on net, with Medicaid eligibility changes reducing states' spending on Medicaid benefits, largely offset by new matching requirements for SNAP [1].

3. Other spending and revenues: These would increase household resources by $129 billion, on net. This category includes federal spending on defense, border security, and infrastructure, partially offset by reductions in federal pensions, receipts from spectrum auctions, and changes in receipts and outlays associated with changes to emissions regulations [1].

The CBO's analysis does not reflect the effects of the additional debt-service costs or the macroeconomic effects of the bill. The analysis also excludes tax provisions not allocated in the JCT's distributional analysis of H.R. 1 [1].

The CBO's findings align with concerns raised by organizations like the Center for American Progress, which estimates that the bill would lead to 16 million people losing coverage by 2034 due to cuts to Medicaid and the Supplemental Nutrition Assistance Program (SNAP) [2].

As the bill progresses to the Senate, financial professionals and investors should consider the potential impacts on household resources and the economy. The CBO's analysis provides a useful starting point for understanding the distributional effects of the legislation.

References:
[1] https://www.cbo.gov/publication/61387
[2] https://www.americanprogress.org/article/the-cbo-confirms-the-devastating-harms-of-house-republicans-one-big-beautiful-bill-act/