This week, House Republicans finished releasing text for a radical and partisan tax and budget bill that would provide enormous tax breaks for the wealthy, partially funded by cuts to programs that help vulnerable Americans meet their basic needs. The bill would enact the largest Medicaid cuts in history; slash food assistance and home utility discounts; and accelerate payments for student loan borrowers.
New analysis from the Center for American Progress illustrates how the bill could raise costs for a working-class household in the future by thousands of dollars annually—compared to a tax cut of $279,000 for a billionaire. (see Figure 1)
Imagine a 55-year-old couple. On top of helping care for their grandchildren and their aging parents, Michael and Lisa have been working part-time seasonal jobs to earn a combined annual income of $25,000 (118 percent of the federal poverty level, or FPL) over the course of the year. Because their state expanded Medicaid under the Affordable Care Act, the couple has health insurance through Medicaid, which covers the costs of Lisa’s ongoing breast cancer treatment and Michael’s prescriptions. The Supplemental Nutrition Assistance Program (SNAP) helps them put food on the table.
The legislation would increase the couple’s costs by $19,224. The couple would not see a change in taxes under the bill but would face higher costs in the form of:
- $15,966 more in health coverage. The bill would impose Medicaid work reporting requirements, starting in 2029. Previous state work reporting requirements in Georgia and other states have shown that many working people like Michael and Lisa lose coverage because they cannot make it through the red tape to prove they have jobs. According to the nonpartisan Congressional Budget Office, the bill will contribute to 13.7 million fewer Americans having coverage by 2034. Without Medicaid, the couple would face the tough choice of going uninsured or purchasing a private insurance plan to cover the cost of their prescription medications, doctor visits, or hospital stays. Under the bill, they would also be ineligible for tax credits toward purchasing health insurance marketplace coverage on their own. The annual premium for a bronze-tier plan for both of them would be $15,966. This is equivalent to 63 percent of their pretax income, which they would not be able to afford to purchase.
- $2,844 more for food and groceries. The House Agriculture Committee text calls for a $290 billion reduction for SNAP, a program that helps 42 million families afford food. The proposal would raise the top of the age range for recipients subject to work reporting requirements from age 54 to 64. This policy would impose a three-month time limit on benefits in a three-year period for not complying with these requirements, which could take away $2,844 the couple receives in annual SNAP benefits if they are unable to consistently prove they work enough hours.
- $414 more for electricity, natural gas, and gasoline. The legislation will increase the family’s utility bills for electricity and natural gas by $94. Brand new analysis from the Rhodium Group shows that this nearly full repeal of energy efficiency and clean energy investments would increase annual household electricity costs nationwide by an average of $94 annually by slowing down affordable development of renewable energy projects and raising costs for people to improve the efficiency of their homes. In addition, the repeal of the electric vehicle and clean energy tax credits means that there would be fewer electric vehicles and higher demand for gasoline, leading to higher gasoline prices. Based on recent analysis, households would likely face about a $320 increase to their annual gasoline bills.
By contrast, the legislation would provide enormous tax giveaways for the wealthy, providing around $1.5 trillion in tax breaks for the top 5 percent of income earners. In fact, under the House Ways and Means Committee proposal, the top 0.1 percent of earners would receive around the same tax cut in aggregate as Americans in the bottom half of earners combined. A billionaire with an income in the top 0.1 percent by income would receive a tax break of $279,038.
In 2023, the 0.1 percent of wage-earners had an average $2.8 million in annual wages. Some ultrawealthy individuals may have relatively little taxable income relative to their wealth in a given year due to tax loopholes, such as for capital gains, and tax-avoidance schemes.
Conclusion
Congressional Republicans’ legislative package to dramatically reduce taxes for the wealthy would come at a steep cost to lower-income Americans. Moreover, communities across the country could see collateral damage from cuts to SNAP and Medicaid—which could financially strain grocery stores and rural hospitals—and the plan would also be a drag on the economy as a whole. Congress should reject the bill as a deeply unfair deal that would irreparably harm working families.
Methodology
The household scenarios in this analysis are intended to illustrate the cost increases and tax breaks that Americans could expect under the Republican reconciliation bill if all provisions were in full effect. The costs actual families will face vary by family composition, state, year, and other circumstances.
The tax breaks were calculated based data points from the Joint Committee on Taxation’s estimates of revenue effects and distributional analysis; the Congressional Budget Office’s budget outlook; model estimates from the Tax Policy Center; and bill text from the House Ways and Means Committee. Each household’s estimated annual change in taxes is approximated for 2027.
Currently, while people with incomes of at least 100 percent of the FPL are generally eligible for premium tax credits for health insurance marketplace plans if not eligible for Medicaid or employer-sponsored insurance. The House Energy and Commerce Committee’s bill text would classify those who lose Medicaid by failing to meet work reporting requirements as eligible for “minimum essential coverage” and therefore ineligible for marketplace financial assistance. According to KFF’s premium calculator, in 2025 the U.S. average cost for a bronze plan from the health insurance marketplaces without subsidies for two 55-year-olds is $15,966 per year, or about $1,330 per month.
The estimate of the couple’s lost SNAP benefits is equivalent to full-year benefits for a 2-person household earning $25,000, using fiscal year (FY) 2025 income eligibility thresholds and the average shelter deduction taken during FY 2022, the latest available. In the first year when their benefits are terminated, the couple would still receive SNAP for 3 months, making their benefits lost for the partial year $2,133. During the next couple years, however, they would receive nothing in benefits compared to around $2,844 if they maintained eligibility (the exact level in any year would be adjusted for cost of living and deductions).
The estimated household increases in energy costs are based on Rhodium Group’s analysis of the Ways and Means Committee text. Home electricity costs would rise by $71.55 and home fuels would rise by $22.55, for a total of $94.10. Rhodium’s data on the increase in gasoline costs are on file with the authors.
Acknowledgement: The authors thank Bobby Kogan, Shannon Baker-Branstetter, Lily Roberts, Andrea Ducas, Lucero Marquez, Jamie Friedman, Sachin Shiva, Mimla Wardak, and Aurelia Glass for valuable input.