Analysis of Tax Provisions in the House Reconciliation Bill: Preliminary National Estimates

See also: The House Tax Plan, By the Numbers

The House of Representatives is debating major tax and spending legislation titled the “One Big Beautiful Bill Act.” This preliminary analysis examines the bill’s tax provisions as drafted on Tuesday, May 20 and will be updated as changes are made to the legislation. The estimates shown here were generated with the ITEP microsimulation model and reveal that the tax provisions would significantly favor the richest taxpayers.

• The poorest fifth of Americans would receive 1 percent of the bill’s net tax cuts in 2026 while the richest fifth of Americans would receive two-thirds of the tax cuts. The richest 5 percent alone would receive a little less than half of the net tax cuts that year.
• The richest 1 percent of Americans would receive a total of $138 billion in net tax cuts in 2026, significantly more than the $92 billion that would go the bottom 60 percent of Americans.
• The richest 1 percent of Americans would receive an average net tax cut of $79,000, many, many times more than the average tax cut received by other income groups.
• The bill would provide larger tax cuts as a share of income to high-income taxpayers than to either middle-class or working-class families (2.7 percent of income for the richest 1 percent compared to 2.4 percent for the middle fifth of Americans and 0.9 percent for the poorest fifth of Americans).
• Even foreign investors who own shares in U.S. companies would benefit more than the poorest fifth of Americans. These foreign investors would enjoy $24 billion in tax cuts in 2026 compared to just $5 billion for the bottom 20 percent of Americans.

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These figures do not include other potential costs to families in the bill, such as deep cuts to Medicaid and food assistance. The figures also do not include the effects of tariffs being charged on U.S importers of foreign goods. Including these effects would negate some or all the tax cuts for working-class and middle-class families.

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Methodological Note

The preliminary calculations described above examine the expected effects of the One Big Beautiful Bill Act (OBBBA) provisions that will be in effect in Tax Year 2026. The analysis includes 96 percent of the revenue-raising provisions and 98 percent of the revenue-losing provisions, measured by revenue impact, that will be in effect that year. The minor provisions excluded from the analysis are generally indirect taxes with an uncertain distributional impact or are items for which reliable distributional data are otherwise not publicly available.

The analysis was conducted using the ITEP tax model. The ITEP model was constructed by pairing federal tax return data from the Internal Revenue Service (IRS) with observations from the U.S. Census Bureau’s American Community Survey (ACS) to create a valid representation of the U.S. population, including federal filers and nonfilers. These data are further supplemented with data from a wide range of other sources such as Bureau of Labor Statistics’ Consumer Expenditure Survey and the Federal Reserve’s Survey of Consumer Finances.

This analysis examines the bill language as proposed on May 12 and relies in part on the revenue estimates contained in Joint Committee on Taxation publication JCX-22-25R to calibrate certain aspects of the modeling. The data contained in this brief should be considered preliminary and will be updated in the weeks ahead as the bill evolves and as we make methodological enhancements to our approach to modeling its various provisions.

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