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A sweeping new tax bill crafted by House Republicans and filled with Trump-era tax priorities would add $3.7 trillion to the federal deficit over the next decade, according to a new estimate released Tuesday by the Joint Committee on Taxation (JCT).
The cost, while steep, still fits within the $4.5 trillion limit set by the congressional budget blueprint adopted earlier this year. That framework gave the House Ways and Means Committee the green light to advance deficit-increasing changes as part of Republicans’ broader domestic agenda.
JCT’s tables show the plan’s gross cost would be $5.6 trillion, with approximately $1.9 trillion in offsets stemming from slashing clean energy tax credits and beefing up international tax enforcement.
Among the largest contributors to the projected deficit is the extension of the individual income tax rate reductions first enacted in President Trump’s 2017 Tax Cuts and Jobs Act, which are currently scheduled to expire after 2025. Maintaining these lower rates will cost $2.2 trillion through 2034.
Other high-cost items include:
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$1.3 trillion to extend the expanded standard deduction
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$1.4 trillion for maintaining the increased alternative minimum tax exemption
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$800 billion to keep the boosted child tax credit (CTC)
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$700 billion for enhanced pass-through business deductions
Notably, some provisions Trump proposed on the 2024 campaign trail also appear in the bill, albeit temporarily through 2028:
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$124 billion for exempting overtime pay from taxation
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$40 billion to eliminate taxes on tips
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$71 billion for a larger senior deduction
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$57 billion for ending taxes on car loan interest
While the bill’s massive deficit impact has raised red flags for some fiscal conservatives, Republican leaders argue the long-term benefits outweigh the short-term costs. Still, voices like Rep. Chip Roy (R-Texas) have expressed concern.
“We cannot continue down the path we’ve been going down,” Roy wrote on social media. “We will need significant additional changes to garner my support.”
The JCT report was released ahead of a Ways and Means Committee hearing and uses the Congressional Budget Office’s (CBO) January baseline for comparison. However, the score does not include an estimate for proposed Medicaid restrictions, which will come later from the CBO.
To help offset the revenue losses, the GOP plan rescinds several key green energy incentives created under the Inflation Reduction Act, including:
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$78 billion from terminating the clean vehicle credit
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$104 billion from ending the commercial clean vehicle credit
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$154 billion from eliminating the clean electricity investment credit
Additionally, $116 billion is expected from improved international tax enforcement, and a modest $15 billion from changes to the Earned Income Tax Credit.
Despite the partisan nature of the tax package, its financial scope and political consequences are likely to dominate budget debates heading into the 2025 fiscal year and the presidential election cycle.
