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By Suzanne Blake and Jenna deJong
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The House of Representatives has approved a Republican budget resolution that includes $4.5 trillion in tax cuts and $2 trillion in spending reductions over the next decade. The package, championed by Speaker Mike Johnson and backed by former President Donald Trump, seeks to extend expiring tax cuts from the 2017 Tax Cuts and Jobs Act while instructing the Energy and Commerce Committee—which legislates on Medicaid—to identify at least $880 billion worth of cuts.
Why It Matters
The budget is poised to have an impact on American taxpayers, with benefits and burdens distributed unevenly across income brackets. Proponents argue that the plan will extend tax relief and promote economic growth, while critics warn that it disproportionately benefits high-income earners at the expense of low- and middle-income families. According to an analysis by the Center on Budget and Policy Priorities (CBPP), "the cost of extending tax cuts for households with incomes in the top 1 percent — $1.1 trillion through 2034 — equals roughly the same amount as the proposed potential cuts for health coverage under Medicaid and food assistance under the Supplemental Nutrition Assistance Program (SNAP)."
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What To Know
The budget's impact varies across different income groups. High-income earners, particularly those in the top 1 percent, will benefit the most, receiving $1.1 trillion in tax cuts, according to the CBPP. The average annual tax cut for individuals making $743,000 or more is estimated to be $62,000. Corporate tax cuts and extensions of the 2017 Trump tax reductions further favor this demographic.
Middle-income households will also see some benefits. Ways and Means Committee Chairman Jason Smith said that an average family of four making the median U.S. income of $80,610 would avoid a $1,700 tax increase, as the budget extends key tax cuts from 2017.
However, these households could face higher costs due to reductions in student loan assistance and Affordable Care Act subsidies.
For low-income households, the budget presents significant risks. Deep spending cuts to Medicaid and the Supplemental Nutrition Assistance Program (SNAP) could leave millions without essential services. Many individuals in this group see little to no tax relief while experiencing the greatest reduction in government assistance.
"The current budget proposal from a tax standpoint more than likely won't produce many changes, but rather simply extend the tax changes passed during the first Trump administration," Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek. "Those tax cuts resulted in major savings for high-income individuals and families who would have to face an estate tax, but the reductions were more modest for most middle and working-class households."
Overall, high-income earners and businesses are likely to see the most financial gains from the budget, while lower-income individuals and those dependent on public assistance may experience increased economic hardship. Middle-class families could see mixed results, benefiting from tax cuts but facing higher costs for critical services.
The CBPP estimates that the House budget would require the Energy and Commerce Committee to cut at least $880 billion, the Agriculture Committee to cut at least $230 billion, and the Education and Workforce Committee to cut at least $330 billion. These reductions would primarily impact Medicaid, SNAP benefits, and student loan programs.
Samantha Jacoby, deputy director of federal tax policy for the CBPP, wrote in a CBPP blog post on February 21 that "the House Republicans' budget resolution calls for committees to enact $2 trillion in deeply harmful cuts through 2034 in programs and services for families and communities, including cuts to Medicaid, SNAP, and student loans." Her blog post suggests that the budget "would give tax cuts to the wealthy and partially pay for them by taking health care and food away from people who face challenges affording these essential needs."
Although it does not explicitly reference Medicaid, the resolution instructs the Energy and Commerce Committee—which legislates on the program—to identify at least $880 billion worth of cuts.
What People Are Saying
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "While few taxpayers will get angry with a smaller bill, these cuts come at a time when the country's growing deficit is coming under scrutiny, especially in the role it has played in recent inflationary pressures. The tax cuts are good for some Americans' wallets, but the long-term implications may not be."
Rep. Val Hoyle (D-OR) said in a press release: "After running on reducing the federal spending and the deficit, House Republicans have put forward a budget busting bill that will take healthcare away from millions of Americans and food away from hungry people—all so they can give massive tax breaks to their billionaire buddies."
Rep. Claudia Tenney (R-NY) posted to X on Feb. 25: "@HouseGOP took the first step today toward delivering on our promise to the American people: to craft a fiscally responsible budget that reins in out-of-control spending and lowers costs for hardworking families."
What Happens Next
The House resolution is the first step in a longer legislative process. The Senate, which has a narrow Republican majority, is expected to take up its own version of the budget. If both chambers pass differing proposals, a reconciliation process will be required before the legislation can be enacted.
Correction 2/27/25, 7:09 a.m. ET: This story was corrected to say that the Republicans have a Senate majority.
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