Congress approves $5 trillion tax cut—but is it historic?

A sweeping tax overhaul promises deep cuts—but tariffs and spending trims soften the blow. Will it reshape the economy or deepen deficits?

, and Administrator

2025 November 15 . 9:26 AM

1 min read

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Congress approves $5 trillion tax cut—but is it historic?

Congress has passed the One Big Beautiful Bill Act (OBBBA), a new tax cut law that significantly reduces federal tax revenue. The act, championed by Republican politicians, is set to slash revenue by $5 trillion from 2025 through 2034. However, its impact is somewhat offset by spending cuts totaling about $1.1 trillion.

The OBBBA extends the Tax Cuts and Jobs Act (TCJA) and incorporates several of the president's tax cut ideas. It is projected to reduce federal tax revenue by an average of 1.4 percent of GDP over the 10-year budget window, making it larger than the TCJA but smaller than the Economic Recovery Tax Act of 1981, which reduced revenue by 2.89 percent of GDP on average.

Including the impact of President Trump's tariffs, which are estimated to increase tax revenue by $2.4 trillion, the net revenue reduction from the OBBBA is $2.6 trillion. This ranks it as the eighth largest tax cut in U.S. history. Despite political claims, it is actually the sixth largest tax cut, behind acts like the Revenue Acts of 1945, 1948, and 1964, and the Reagan tax cuts of 1981.

The OBBBA, while significant, is not the largest tax cut in U.S. history as some political leaders have claimed. Its impact, while substantial, is somewhat mitigated by the inclusion of spending cuts and the offsetting effect of tariffs. The full extent of its economic impact remains to be seen.