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May 13, 2025

Tax cuts cost $3.7T

House Republican tax cuts cost $3.7T, forecasters say

An analysis by the official Joint Committee on Taxation indicates GOP lawmakers are on track to meet their tax and spending cut parameters.

Brian Faler

House Republicans’ tax package would cost $3.7 trillion, Congress’ nonpartisan budget forecasters said in a new, updated cost estimate, which could give lawmakers some breathing room as they try to stay within the budget parameters they have set for themselves.

The estimate indicates lawmakers are on track to hit their $4 trillion budget target, while still leaving some room for further changes, including potentially additional adjustments to a controversial cap on state and local tax deductions.

Under the House GOP’s budget, the size of their tax cuts is contingent on lawmakers simultaneously cutting spending, and Republicans are hoping to match $4 trillion in tax cuts with $1.5 trillion in spending reductions.

The forecast by the Joint Committee on Taxation comes ahead of a meeting slated for Tuesday afternoon where the tax-writing Ways and Means Committee will formally take up the tax package. Additional changes are possible there, and also later, when Republicans are preparing to take the legislation to the House floor.

Republicans have penciled in plans to lift the state and local tax deduction (SALT) cap to $30,000 from $10,000, and create a new income limit on claiming the deduction, but some blue-state Republicans are balking, calling that inadequate.

The overall plan would have some of their tax cuts take effect this year, so that people will see a difference in their tax refunds next year, ahead of the midterm elections, and the estimate shows tax cuts costing $85 billion in 2025 and another $473 billion in 2026.

The analysis gives a sense of scale of the different proposals, showing for example that provisions demanded by President Donald Trump are not as large as some expected. A new deduction for overtime pay would run $124 billion over four years, with a similar plan for tips costing $40 billion during that period.

An expanded deduction for seniors would cost $71 billion, and a break for car-loan interest would run $58 billion.

Plans to create so-called MAGA accounts, a new type of savings vehicle for kids, would run $16 billion, with the bulk of that coming from a pilot program in which the government would kick in $1,000 per eligible child. By comparison, Republicans’ plan to expand the Child Tax Credit would cost nearly $800 billion.

As for how Republicans intend to offset some of the cost of their plan, some of the heaviest lifting would be done by plans to scale back green energy credits championed by the Biden administration, which the JCT sees generating more than a half-trillion dollars.

Taxes aimed at other countries that impose “unfair” levies on American companies would generate $116 billion, and a proposal to limit corporations’ ability to claim charitable deductions would cost $17 billion.

The estimate replaces a nearly $5 trillion price tag JCT had put on a small portion of Republicans’ plans released last week.

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