Penn Wharton updated their budget analysis of the House bill as it now stands. 
Please consider the Penn Wharton Budget Model updated May 20, 2025.
Chart Notes
- To make the above chart, I added the primary deficit line from the Penn Wharton Deficits Effects chart to the Penn Wharton Revenue Effects chart. The yellow highlights are mine.
- The chart shows the impact if the changes were made permanent. Recall the TCJA was supposed to expire this year. It won’t. Republicans are calling that expiration a tax hike, and will do the same with new tax breaks on scheduled to expire in 2029. Expiring breaks was a gimmick used to pass the 2017 TCJA and the same gimmick (to understate the deficit) is used again.
- Penn Wharton calculates the deficits at $3.175 trillion in the current legislation as written. That includes several temporary tax provisions and spending increases set to sunset (expire) within a few years of enactment.
New Individual Tax Provisions
- Limit itemized deductions: The bill institutes a new limit on itemized deductions beginning in tax year 2026. This limitation applies to filers with taxable income that exceeds the 37 percent ordinary rate threshold for their filing status and reduces the allowable itemized deductions by 2/37 of the amount by which taxable income exceeds this threshold (or the total amount of itemized deductions, whichever is smaller).
- No tax on tips [*]: The bill provides a temporary deduction for qualified tip income, available to all filers regardless of itemizing status, beginning in tax year 2025. The bill sets general guidelines for forthcoming regulations governing what constitutes qualified tip income. These guidelines are intended to limit the occupations for which tipped income will qualify for the deduction. The deduction is limited to non “highly compensated employees,” generally individuals making less than $160,000 per year in 2025 dollars. This deduction ends after 2028 in the actual legislation but is modeled as permanent herein.
- No tax on overtime [*]: The bill provides a temporary deduction for the bonus amount of eligible overtime pay, available to all filers regardless of itemizing status, beginning in tax year 2025. The deduction only applies to overtime covered by the Fair Labor Standards Act, and is limited to non “highly compensated employees,” like the tip income deduction. This deduction ends after 2028 in the actual legislation but is modeled as permanent herein.
- Additional deduction for seniors [*]: The bill provides a new temporary bonus deduction for all individuals who have attained the age of 65. This deduction is $4,000 per individual and phases out at a rate of 4 percent of AGI over $150,000 for married taxpayers filing jointly, or $75,000 for all other filers. This deduction is available to all qualifying taxpayers regardless of filing status beginning in tax year 2025, and it expires after 2028 in the actual legislation but is modeled as permanent herein.
- No tax on auto loan interest [*]: The bill provides a temporary deduction for qualified passenger vehicle loan interest beginning in 2025. The bill outlines several restrictions on what constitutes qualified auto loan interest. It also limits the total deductible amount to $10,000 per year, or 20 percent of the taxpayer’s AGI more than $100,000 ($200,000 for married taxpayers filing jointly), whichever is lower. This deduction expires after 2028 in the actual legislation but is modeled as permanent herein.
- Charitable deduction for non-itemizers [*]: The bill provides a temporary deduction for charitable contributions, available to non-itemizers. This deduction is limited to $300 for married taxpayers filing jointly, and $150 for all other filers. It is available beginning in tax year 2025 and expires after 2028 in the actual legislation but is modeled as permanent herein.
- Permanently increase the SALT deduction cap to $30,000: In the 2017 TCJA, the previously unlimited individual state and local tax (SALT) deduction was capped at $10,000, meaning itemizers could only claim a maximum of $10,000 of their state and local tax liability as a deduction. This bill provides a permanent new SALT deduction cap of $30,000. This cap phases out at a rate of 20 percent of adjusted gross income over $400,000, to a minimum cap of $10,000.
Instead of simplifying the tax code, Trump sloshed around more favors trying to buy votes.
Deficit Effects: Conventional and Dynamic
The total conventional-basis cost of legislation of $4,806 billion over 10 years. Including dynamic effects does not reduce the legislative costs despite small, positive increases in GDP over the first decade.
The actual savings from economic growth do not appear until 2033 and 2034 and are not enough to overcome higher costs in earlier years in the 10-year budget window. After 2033, the dynamic costs fall relative to conventional, a difference which persists until 2054.
Key Points
- We consider an illustrative scenario where tax and spending provisions approved by the House Ways and Means Committee are made permanent, which we estimate will increase primary deficits by $5,804 billion ($5.8 trillion) over 10 years. Three other Committees increase primary deficits by another $606 billion. These changes are partly offset by spending cuts of $1,604 billion, for a total conventional cost of $4,806 billion.
- Despite increasing debt by 11.1 percent in 10 years and 24.3 percent in 30 years, GDP remains mostly flat, eventually slightly rising by 0.2 percent in 30 years. The average wage falls by between 0.5 to 0.6 percent over the next 30 years. Primary deficits are higher than conventional — rising to $4,947 billion — in the budget window when accounting for economic dynamics, due to microeconomic responses and compositional effects described in the brief.
- The lack of fall in GDP despite higher debt is partly driven by improvements to investments as well as increases in savings and labor supply, as households face a weaker social safety net associated with reductions in spending. On a conventional basis, households in the first income quintile lose about $940 in 2026, reflecting net reductions in taxes and transfers, including cuts to Medicaid and SNAP. The top 10% of the income distribution receives about 65 percent of the total value of the legislation. (Under current law, the top 10 percent of the income distribution pays about 70 percent of all federal taxes).
- On a dynamic lifetime basis, lower-income households are worse off, with losses averaging $30,000 in lifetime value for the lower-income working-age population. All future households are worse off, including those who enter the economy with relatively higher productivity.
Trump Threatens to Oust Republicans
Please note that to get this budget monstrosity passed, Trump Threatens to Oust Republicans Who Want to Cut SALT and Medicaid
Trump finally took a fiscal stand. It’s with Democrats.
Instead of uniting Republicans to reduce the deficit, Trump says Rep. Thomas Massie (R., Ky.) should be “voted out of office.”
And look at Johnson who repeatedly took off the table the idea of cutting back on the share the federal government contributes to Medicaid.
Also note, Trump Blasts Walmart on Price Hikes, Sounds Just Like Elizabeth Warren
Republicans should be seriously embarrassed by Trump.
King Deal is not interested in making deals.
For more on King Deal, please see Hoot of the Day: Trump Threatens a Return to Reciprocal Tariffs
We’ve gone from 200 deals “100%” to threats of returning to reciprocal tariffs if countries don’t deal.
Trump wants to command people and the markets to bow to his wishes, even to the point of sounding like Elizabeth Warren. How embarrassing.
Remember when Republicans wanted income tax on a post card? Term limits? Balanced budget?
Right that was when Democrats were in power. All that pie in the sky goes out the window when they are in power to most likely return when the Democrats take over in 2026 and 2028.
Looking at policy over the last 40 years I think the Republicans are actually “for” the few the Democrats are actually “for” the many.
Interestingly when government puts money to work on infrastructure and investments that make Americans more efficient, the economy booms and tax revenues boom.
Clinton did that, he put funds in the hands of consumers and tax revenues exploded!
Growth is how you pay down debt. Draconian tariffs are in fact taxes and slow business activity and the velocity of money. Yes, they decrease tax revenue while regulating businesses in ways they can not predict.
Trump is pushing America and its economy into a huge air pocket of economic disruption and uncertainty.
There have been over 70 statements on tariffs from trump and no business can properly forecast what the next edict will be. Therefore they are hunkering down and waiting until he dust settles before making multi billion dollar decisions on where to locate their next production facility.
Where is money being made? Where are margins increasing? Oddly it is one of the oldest markets… no, not prostitution 😉 Gold mining companies have seen their margins explode to over 200% in many cases and their dividends historically go up along with profits.
taxes are for little people.
Trump is gonna borrow at least $5 trillion — inflation be damned. He has a history of borrowing lots from shady banks and then not paying back. Why should the proles of America be lesser victims. The man couldnt care less about tax revenue. These could be banner years for tax evasion the next 4 years.
The 30-year UST was 5.13 in 6/2007, 6.49 in 12/1999
The fuse has been lit, only a matter of time…..
It looks like our only salvation would be the Democrats impeaching Trump and just when you think this plan will fail, all the Republicans who will get Primaried also vote to impeach. Too bad the Democrats don’t want to stop Trump because he is handing them landslide victories in the Midterms. By then it will be too late to save America.
Too bad the Dems what to run the US so bad they are willing “to destroy it to save it.
Dems aren’t destroying the USA, Trump is. To the extend Dems are, both parties are in a loving daisy chain of insider power brokering at the expense of all American citizens. What exactly are the Dems doing to destroy America more so than Trump and his obeisant lackeys in the GOP? There is no path to impeach, your idea of GOP defecting because they grew moral fibers is a hilarious hallucination.
You are assuming there will be another election in the US.
Correct, trump has already declared the he would be “Dictator on day one” and fomented an insurrection to deny election results. There is nothing to indicate that trump would respect any rule of law from any authority.
4.8T deficit in 10 years??!! That’s a joke, right? It’s very likely that they can manage it in one year, perhaps two at the most.
Trump will borrow at least $5 trillion.
… in just the first year of his term!
I sense a degree of pessimism about the future in the thread. If you are drinking a beer right now, just remember that the future’s uncertain and the end is always near. Let it roll baby, roll.
all night long
In the 1970s many people thought pollution and crime would end the country. In 2025, neither happened. We arent lucky enough to disappear from the earth. Who would pay the light bills?
What was your first clue? We have a president that is threatening the very foundations our freedom and threatening our allies and neighbors with the overthrow of their governments. Trump even threatens his own party members if they support fiscal responsibility!
Many of us are in touch with the grim reality of having the U.S. being run by a dictator and the implications that has for the free world.
While we were not looking Canada is approving the building of a LNG export terminal to export its LNG to Asia instead of its former ally.
The Russian Ruble is up 40% since trump took office and Russia is ignoring our sanctions because of trump.
Who does trump work for?
US 30 year above 5% this morning. Japan bonds about to blow up?
https://www.telegraph.co.uk/business/2025/05/21/trump-sparked-debt-crisis-could-blow-up-global-economy/
Swiss bank considering negative rates.
You have been warned.
Correct about Japan.
Blowing up exposed hedge funds is just the start of the unwinding of the carry trade on the Yen.
If I lived in Japan I would have converted my savings to actual physical gold or U.S dollars long ago…
Currency crisis right on the horizon for the “Rising Sun” nation.
Cut public services, make sure the average joe loses out on benefits, and supercharge the budget and deficit. Are you tired of winning yet?
Why would anyone consider this surprising? When was the last time the deficit didn’t blow out under a Republican President? A vote for a Republican is a vote for lower tax rates so you can better enjoy life, at the expense of your children. A trade-off that about 1/2 the population is willing to make every day.
if you are still caught up, in 2025, in the blue v red team flim flam like pro wrestling, i can only LOL. idiocracy was a documentary.
That vote will get you higher interest expense, and higher prices. Check the ten year and mortgage rates.
It’s 2042. The federal debt is $274Trillion dollars. Former USA has devolved into a system of barter. One pack of ramen costs two handjobs. Roving packs of bounty hunters capture suspected antisemites and transphobes.
ha ha ha. i think you are an optimist. by 2029 we’ll have west coast secede, and much of flyover country taken over by mex cartel.
The best and most definitive way for CA to separate from the USA is to start digging a hole along the border of CA/NV and then let the ocean flow in.
in 2007*2008 crisis WHEN USA FIN SYSTEM TRULY WAS 1 STEP FROM TOTAL ABYSS Hank Paulson (head of treasury depart) asked CONGRESS ABOUT 500*700 BLN TO SAVE whole fin system!
now IT IS EACH AND EVERY QUATER!
Hank Paulson is the one person most responsible for the Too Big To Fail morass we entered. Every Fannie Mae and Freddie Mac mortgage backed security said explicitly on page one “Not guaranteed by the full faith and credit of the United States of America”. Every buyer of such MBS’s should have been haircutted, but Paulson pled the case that if they were not bailed out they (including foreign countries) couldn’t be counted on to continue buying US debt instruments – including Treasuries. So he made taxpayers eat the loss. Hank Paulson should be hung, beheaded, drawn and quartered. And then burned at the stake and then ground into dust and thrown into a pig sty.
USA IS BANANA REPUBLIC ON STEROIDS.
I THINK IT IS DONE BY DESIGN BY REPUBS AND DEMS
AND I THiNK whole trump thing is by design. he is just patsy!
Patsy? I dunno.
He has mass murdered Americans with the clot-shot bioweapon. The clot shot has made it onto the required list of death-vaxes for kids and is being injected into kids as we speak. Where’s RFK? AWOL?
Trump is mass murdering Palestinians and trying to move the remaining folks elsewhere to give Israel complete control of Gaza and the West Bank. Israel largely has control of Trump’s cabinet, congress and the judiciary.
Does that sound like a patsy to you ….. or willing participant?
Trump is not doing that – He is allowing it and proposed it
= 2 trln budget deficit
most people have the memory span of a goldfish , so i put some facts about no so distant past
====
in 2007*2008 crisis WHEN USA FIN SYSTEM TRULY WAS 1 STEP FROM TOTAL ABYSS Hank Paulson (head of treasury depart) asked CONGRESS ABOUT 500*700 BLN TO SAVE whole fin system!
now IT IS EACH AND EVERY QUATER!
======
USA IS BANANA REPUBLIC ON STEROIDS.
I THINK IT IS DONE BY DESIGN BY REPUBS AND DEMS
AND I THiNK whole trump thing is by design. he is just patsy!
alx
30 – 40 years ago, I’ve never heard of the word, trillion dollars.
Today, trillions here and trillions there.
Print baby print.
Dance while the music’s playing.
Debt and money won’t matter once AI’s take over and all the work is done by robots. Our old economic models will be obsolete then and everything will be free.
Cars will all be autonomous and humans will not be allowed to drive, so no one will need a car. Houses or apartments will be allocated to anyone who needs one or if there aren’t enough in an area, then new ones will be built. Cell phones will be free, as will computing devices such as laptops.
This future is maybe 20 years out. Be patient.
Don’t take cocaine too much.
You people have no imagination. You WILL be assimilated!
No one really cares about the debt.
true. until you need wheelbarrow for money to buy groceries!
and then it is too late!
just google Weimar!
US Treasuries are an asset – until they’re not.
They make absolutely great toilet paper!
I am sitting and waiting for the vote and keeping an eye on bond yields. Will this be the budget straw that breaks the bond vigilantes back? Only time will tell.
Trump’s one eye is always on the stock and bond markets.
You’ll miss the best bull market in history.
Bond vigilantes have been dead for a long time. The term is just bandied about now like threats of the ‘bogey man’.
Meh. Bears have been whinging about the national debt for years but it’s a nothingburger. U.S. is still the cleanest dirty shirt. BTFD and thank me later.
EXACTLY, all this means is Stocks are going higher over the next year.
= it’s a nothingburger.=
sure. until CONGRESS WILL CUT OFF YOU SS money and all YOUR medicine will be private !
people are mo11rons . IT IS FACT AS SUN IS HOT!
They won’t cut off Social Security – it’ll just be almost worthless when a loaf of bread costs $40 and car insurance is $2,000/month.
Almost $2 Trillion of the increased deficit is “expand TCJA individual and estate tax provisions” and “new individual tax provisions”.
The 2017 TCJA was already a big cut in nominal tax rates. Why on earth should the provisions be expanded? What are “new individual tax provisions”? No tax on tips? No tax on overtime? Those are stupid. Most people who get tips already don’t report (all of) them. Not tax on overtime would be a paperwork clusterf*** of epic proportions.
No tax on tips and OT would greatly help the Working and Middle classes. Economic activity would increase as would the collection of sales taxes and income taxes from the jobs created by Americans having more disposable income.
It would help them, assuming tips stay equally high. But the tax break on the ultra rich is far, far larger which then eats into support for the poor, including plenty that work. So in net terms the rich will benefit and the poor will pay for that.
It helps inflation and mortgage rates go higher.
No tax on tips and OT will encourage suckers to work more hours. I guess this is one way to deal with the demographic crisis by extending the work week to 80 hours to improve productivity. It’ll work great until people burn out.
No tax on OT (anything over 40) would be a huge incentive to skilled workers. It might help solve the “demographics slide” in some industries.
Some of our younger highly skilled workers currently turn down OT in favor of “quality time with the family”. It’s a relatively new thing.
Heck, most Linemen I know would kill for this. They already are willing to haul their 5th wheelers to CA and work insane hours at 2x for months on end.
It’s important to note that there is a wide swath of utility workers who are accustomed to working long hours.
According to Mish, “The deduction is limited to non “highly compensated employees,” generally individuals making less than $160,000 per year in 2025 dollars.”
Is that gross before OT? Linemen and other “in demand” skilled utility workers are making $65/hr+…a $135k base.
Paperwork…Sentient is kidding right?
“mitigate” not “solve” is more accurate.
Surely, king herod can push the deficit over $5 trillion.
At some point if you want to actually pay down the debt your gonna need to tax the people with money.
Wonder where we would be if all this time we still had the same tax rates as we did in 1984.
The “nation building” we embarked on after 9/11 is where a lot of the current federal debt came from. Afghanistan alone cost us $2 trillion and counting.
The least we could do is claw back the hundreds of millions in cash that Ashraf Ghani (the US sponsored puppet president) escaped with in 4 cars and 1 helicopter.
Department of homeland security is another trillion or more and yet they haven’t prevented a single domestic terrorist attack on planes or anything else.
We should have done nothing and simply paid out money to anyone killed or maimed by a terrorist incident. Would have cost orders of magnitude less and we’d all have saved tens of millions of hours in security lines in various places.
DHS has cost a lot more than 1 trillion. One of the few attacks that DHS has thwarted was the recent seashell assassination plot by Comey.
“nation building” is not new. We did it in Japan after WWII (quite successful). But it would never work in Islamic countries. It just became an excuse for certain groups to receive public money. When they say “funds for LGBT training in Iran”, not a penny goes to Iran. It’s just a description line for the invoice. I can issue you an invoice for “studying habits of penguins” and none of us would have to leave our homes. As long as we have someone in D.C. to approve the invoice and get his cut.
It was a common practice in Europe during the large agricultural and business EU grants. People were just issuing invoices.
You are correct. Jack Ma said that China didn’t steal our jobs. We just spent $14 trillion on wars over 30 years and accomplished nothing. He said that we could have spent the money more productively on our own people and infrastructure. He’s right, of course. We have wrecked ourselves. We have wrecked our children’s and grandchildren’s futures. Trump and Bessent are doing the best they can, but it’s probably too late.
Doing the best they can would mean cutting “defense” by half, closing most of our overseas bases and cutting off Israel, Ukraine and NATO.
My guess is much worse off.
The reason is those spending government money have no incentive to keep costs down. So if taxes were 20% higher, instead of paying down debt or not running deficits they’d have instead given out vastly more money in salary to government employees, continued to overpay for military hardware, building rentals for Gov’t offices and who knows how many entitlement programs.
In other words Politicians LOVE to spend money that’s not theirs so the best thing we can do is have as low a tax rate as possible since they are going to run deficits anyway.
WINNER WINNER CHICKEN DINNER!!!!
That’s assuming higher rates actually get the government more money.
I’ve pointed this out before: the lowest revenues / GDP percentage since WW2 occurred in 1950 at a bit over 13% with the lowest marginal tax rate at 20% and the highest at 91%.
Percentage isn’t the be-all and end-all as a smaller percentage of a higher number can be more than a larger percentage of a smaller number. But good luck to anyone arguing that GDP is increased by higher tax rates.
No matter the tax rate, history shows the maximum collected is no more than 20% of GDP; we will not solve the debt problem by raising taxes, spending must be cut.
=gonna need to tax the people with money.
oh boy! never been in school? opened 4th grade math book?
money of all 400 wealthiest people in USA combined is less than 2 trln$
you can do this just once
Eliminate the social security cap, tax all income no deductions (taxes on a postcard), limit personal wealth to $2B confiscate the over. Balance the budget.
Here’s a slam dunk: Revenues will be less than forecast, spending will be greater than forecast, and the debt will increase by double or more the projections in the allotted timeframe . We are so screwed, but when? 7-12 years? Fewer? And of course it will be worse when the Dems are back in.
I can’t wait for the Dems’ revenge-spending as well as their accompanying rhetoric. Then the next cycle in reverse, if we get that far.
Oh, you must mean in 2026 when we are in a recession, tax receipts are down over 20%, unemployment is at 7% or higher (U3), U6 is double digit, SNAP and Medicaid are busting at the seems, due to layoffs, bankruptcies, no healthcare, etc. because the Donald drove the economy into a bigger ditch than in 2020.
Who had the last budget surplus? DEMOCRAT. When did budget deficit get out of control? Under a REPUBLICAN. This gaslighting about who is worse is nonsense. Deficit is a REPUBLICAN thing.
these retards are gonna drive us in to the ground
Trump needs a big beautiful prison sentence after Impeached
LOL – He’ll be to old to stand trial.
He might pull a Ronnie and get out of jail because of Alzheimer’s.
Lest we forget Lawrence Walsh didn’t prosecute Reagan for Iran – Contra because of his failing memory.
If so, then Biden should have been shot by a firing squad
There’s still time.
Bring back Eric CIAmello, currently a senior fellow at a local Starbucks.
The US doesn’t prosecute its presidents for crimes while in office: Nixon & Reagan are poster children and Clinton gets a pass since getting a blow job by an intern in Washington and lying about it if caught is common practice. Newt was the king about marital infidelity when he was ramrodding impeachment hearings through Congress.
Trump’s prosecutions were too late and took too long. This may’ve been operating procedure by Biden and his DOJ fearing the dock for himself should he get impeached in his administration.
Bush I and Bush II certainly should’ve been in the dock for their crimes. Bush I for Iran – Contra that he conveniently pardoned his co-conspirators for so they wouldn’t testify against him and Bush II for lying to Congress and the American people about weapons of mass destruction in Iraq. Obama cut Bushie II slack probably because he was guilty of droning innocents and civilians and an American without a warrant.
In other words the presidential club doesn’t want to put their immediate predecessor in the dock for fear his or her successor will do the same to them, particularly if from the opposite party.
bingo. a winner.
It would be much better if nature took it’s course and he got his parade down Pennsylvania Ave….soon.