Who Wins And Loses In The Republican House Tax Proposal?

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On Sunday, the House of Representatives Budget Committee voted along party lines to advance a Republican spending bill that makes sweeping changes to the U.S. tax code.

If approved by the full House, the Senate and signed by the President, the bill would affect the finances of every taxpayer in the country to some degree.

Republicans control both chambers of Congress and the White House, which means they can pass the budget without any agreement from Democratic lawmakers.

Here's who would win and lose if the bill goes through.

The Biggest Winners: High-Income Earners, in the Short Run

The tax bill makes permanent multiple tax breaks from the 2017 Tax Cuts and Jobs Act that were set to expire in 2025 and adds major new ones.

Taken together, the changes would cut 2026 taxes by $2,800 on the average tax bill, according to an analysis by the Tax Policy Center, a nonpartisan think tank. But the amount for a typical taxpayer could be much less, since wealthier taxpayers will reap most of the benefits: the top 20% of households, making $217,000 or more, will get more than two-thirds of the savings, the center found.

The TCJA's provisions being extended include lower tax rates in all but the lowest bracket; a higher standard deduction, the elimination of "personal exemptions;" a deduction of business income, and many other changes.

The Biggest Losers: People on or Seeking Medicaid and Affordable Care Act Health Plans

The bill would make it harder for people with low incomes to enroll and stay enrolled in Medicaid, the federal health insurance program.

One of the biggest changes is the requirement that beneficiaries prove they are working, volunteering, or disabled to receive benefits. Health care experts say the paperwork involved is hard for beneficiaries to manage and would result in millions of workers losing their health insurance coverage.

In total, 8.6 million people will lose health insurance, with no increase in the number of people working, the Congressional Budget Office estimated. On top of that, the bill allows a pandemic-era tax credit that helped people buy health insurance in the Affordable Care Act marketplace expire, resulting in another 5 million people losing health coverage, according to the CBO.

The work requirements were set to kick in in 2029, but may be accelerated. The bill passed the budget committee after Republican lawmakers struck a deal with four holdout GOP members who had demanded the work requirements kick in sooner, according to reports.

Other winners

Families with Children

The bill would increase the maximum child tax credit to $2,500 per child through 2028, providing a financial boost to parents. Unlike the temporary pandemic-era expansion, the child tax credit would remain "non-refundable," meaning parents with little or no income could not claim it.

Car Buyers

The bill would make interest on car loans tax-deductible, even for taxpayers who don't itemize their deductions. The tax break would only apply to American-made cars. Lower-income car buyers would benefit the most from such a break, in terms of percentage of their income, since those households typically spend a greater share of their money on car loan interest, an analysis from the Yale Budet Lab found.

People Who Work Overtime

The bill exempts overtime pay from income taxes. In practice, relatively few workers are eligible for the new break.

Federal law requires employers to pay their workers 1.5 times their pay for any hours worked over eight a day or 40 per week. Many workers are exempt from this requirement, including salaried workers earning more than a certain wage, the level of which is currently being disputed in court. Only 8% of hourly workers and 4% of salaried workers regularly earned overtime in 2024, according to the Yale Budget Lab.

Workers Who Earn Tips

The bill fulfills a Trump campaign promise to eliminate income tax on tips. This would benefit some of the 4% of households with tipped income on their tax returns, though not all. Since many have little income, they aren't charged income tax anyway, the Yale Budget Lab estimated. In all, fewer than 3% of workers will see a tax break, averaging $1,700, according to the analysis.

Other losers

People on food assistance:

A separate bill proposed by the House Agriculture Committee would slash food assistance for the 42 million families who use the SNAP program, requiring states to pay for a portion of the program for the first time.

States could be on the hook for as much as 25% of the bill, and would have to fund it with tax increases, benefit cuts, or reducing eligibility for the program. A 25% benefit cut would mean $1,000 less food aid a year for families in some states, according to an analysis by the Center for Budget and Policy Priorities.

Taxpayers Who Want to File Their Income Taxes Directly With the IRS

The bill would eliminate the IRS's Direct File program, launched as a pilot project in 2024.

The program allowed people to file their taxes directly with the IRS instead of paying private companies like TurboTax or H&R Block to file a return. The program was praised by its 141,000 users in its first year and was expanded in 2025, with an estimated 30 million people eligible to use it.

The bill also ends the "Free File" program, which allows certain taxpayers to file for free with several private tax prep companies in partnership with the government, and creates a new public-private partnership to replace both programs.

Possibly, the future financial stability of the country

All told, the tax cuts in the bill will be far higher than the amount of money saved, leaving the federal government in a bigger financial hole than it already was.

Under the budget, the national debt will be $5.2 trillion higher in 10 years than if the TCJA tax cuts were allowed to expire, the Committee for a Responsible Federal Budget, a think tank, estimated. That figure assumes all the provisions of the bill, some of which expire in 2028, are made permanent.

Assuming permanent tax cuts, the higher national debt could lead to slower economic growth, the Penn-Wharton Budget Lab estimated in an analysis. Low-income earners would be significantly worse off under the law, while even high-income earners would be worse off in the long run due to the negative economic effects of the ballooning national debt, economists at the lab said in a commentary.