President Donald J. Trump
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Research

The One Big Beautiful Bill: Legislation for Historic Prosperity and Deficit Reduction

The White House
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Executive Summary

On May 22, 2025, the House of Representatives passed H.R.1, the One Big Beautiful Bill (OBBB) Act to avert a $4 trillion tax hike from the expiration of the 2017 Tax Cuts and Jobs Act (TCJA) and to deliver additional pro-growth and pro-worker tax cuts in line with those promised by President Trump. On June 16, 2025, the Senate Finance Committee released OBBB text that demonstrated a similar commitment to building upon the legacy of the TCJA, including by making permanent pro-investment provisions like full expensing for equipment, full expensing for research and development (R&D), and the Opportunity Zone incentives. In this paper, the Council of Economic Advisers (CEA) analyzes the economic and fiscal impact of the OBBB alongside President Trump’s other economic priorities, evaluating outcomes compared to TCJA expiration.

Relative to the CEA report released in May 2025 on the effect of President Trump’s proposed tax cuts, this paper uses an updated set of tax provisions based on the latest Senate text and also incorporates the fiscal consequences of the OBBB, showing how it impacts the trajectory of deficits and debt relative to GDP.

The tax provisions examined in detail by this paper include:

  • Permanent extension of lower tax rates for small businesses from the TCJA, including the section 199A deduction for pass-through income;
  • Permanent full expensing for equipment;
  • Permanent full expensing for research and development (R&D);
  • Temporary full expensing for new factories;
  • Permanent extension of individual tax relief from the TCJA coupled with temporary enhancements;
  • Temporary no income tax on overtime, no income tax on tips, and tax relief for seniors; and
  • Permanent extension and enhancement of Opportunity Zones (OZ) incentives in distressed areas.

The CEA estimates the following economic effects of the OBBB in the first four years of implementation:

  • 7.3 to 10.2 percent higher inflation-adjusted (real) investment;
  • 4.6 to 4.9 percent higher level of real GDP (about 1.1 to 1.2 percent higher average growth per year);
  • $4,000 to $7,200 higher annual real wages per worker;
  • $7,600 to $10,900 higher annual after-tax take-home pay for a typical family with two children;
  • 6.9 to 7.2 million full-time equivalent (FTE) jobs protected and created.

The CEA finds the following additional economic and fiscal impacts over the ten-year budget window:

  • $100+ billion of investment, 1+ million jobs, and hundreds of thousands of new homes to support workforce growth in Opportunity Zone communities, especially in rural areas;
  • $2.1 to $2.3 trillion in offsetting deficit reduction due to higher growth from the OBBB tax provisions;
  • $1.3 to $3.7 trillion in additional offsetting deficit reduction from higher growth unleashed by OBBB-enhanced deregulation and energy policies;
  • $8.5 to $11.1 trillion in total offsetting deficit reduction from Trump economic policies anchored by the OBBB, including discretionary spending reductions and tariff revenue;
  • Debt falls as a share of GDP to 94 percent in 2034 under Trump economic policies anchored by the OBBB instead of rising to 117 percent if the TCJA expires.