Distributional Impact of H.R. 1

A quick run-down on Trump and Republican’s H.R. 1 bill. This has already passed in the House and is now at the Senate for consideration. There may be some changes and resistance yet.

There is a widespread agreement the most vulnerable will take the biggest hit, and it is by design. Under H.R. 1, the annual incomes of the poorest tenth of the population decline by $1,600 on average while those of the richest tenth increase by $12,000 on average, according to new estimates by the Congressional Budget Office (CBO).

Among other things, the bill weakens public schools by creating a nationwide voucher scheme and slashing support for Medicaid, which covers nearly half our students and 1 in 10 education support professionals. 

Cuts in the Supplemental Nutrition Assistance Program (SNAP) threaten school meals while cuts in student loan programs make higher education even more unaffordable. 

The bill also provides a lot more money for even more ruthless immigration enforcement. 

Income Tax Reductions

CBO estimates that, on average, household resources would increase over the 2026–2034 period, mainly because of reductions in how much households owed in federal taxes. The effects on household resources would vary by channel and across the income distribution.

Who Loses:

Resources for households in the lowest decile of the income distribution would decrease by about $1,600 per year (in 2025 dollars) compared with their projected income in CBO’s baseline projections (see Figure 1).5 That amounts to 3.9 percent of their income (see Figure 2). Those projected decreases are mainly attributable to reductions in in-kind transfers, such as Medicaid and SNAP.

Who Stays Just About the Same:

Households in the fifth and sixth deciles (that is, in the middle of the income distribution) would see their resources increase by $500 (or 0.5 percent of projected income) and $1,000 (or 0.8 percent of projected income), respectively.

Who Takes Home the Most:

Resources would increase, on average, over the projection period by about $12,000 for households in the highest decile, amounting to 2.3 percent of their projected income. Those projected increases are mainly attributable to reductions in the taxes households in that decile owe.

Change in Resource Per Household by Cash

Change in Household Resource as a Percentage

Those estimates reflect the average distributional effects over the 2026 – 2034 period. The distributional effects would vary throughout that period as different components of the legislation were phased in and out.

CBO’s analysis combined the four channels (described above) through which household resources would be affected. Each channel is allocated to households in different ways and would affect households differently. For example, both reductions in taxes and increases in border security spending would have a
positive effect on household resources in this analysis, but the ways in which households would benefit from them differ.

As you can see and as reported H.R. 1 impact is heavily skewed to the upper income brackets. This comes at the expense of the lower income brackets who are losing government programs to fund the giveaway to the upper income brackets.

“Distributional Effects of H.R. 1”, the One Big Beautiful Bill Act