Washington, D.C., August 23, 2025 – U.S. Vice President JD Vance promoted President Donald Trump’s One Big Beautiful Bill Act during a speech in Peachtree City, Georgia, on August 21, claiming it delivered “the biggest tax cut for families” in U.S. history. However, economic analyses rank the 2025 law as the third-largest tax cut since 1980, primarily for extending Trump’s 2017 tax cuts rather than introducing significant new reductions.
Signed into law on July 4, 2025, the One Big Beautiful Bill Act makes permanent the 2017 tax cuts, which were set to expire at the end of 2025. It also introduces new tax breaks, including cuts on tips, overtime pay, and for Americans over 65, while increasing spending on defense and immigration enforcement. However, the law cuts funding for social programs like Medicaid and food assistance.
According to PolitiFact, when measured as a percentage of GDP over the first five years, the 2025 law reduces taxes by 1.4%, placing it third behind the 1981 Reagan tax cuts (3.5% of GDP) and a 2012 Obama-signed law (1.7% of GDP) that extended George W. Bush’s 2003 tax cuts. If only new tax cuts are considered, the 2025 law ties for seventh at 0.5% of GDP. Joseph Rosenberg of the Urban-Brookings Tax Policy Center noted that both measurements are valid for assessing the law’s scale.
For most Americans, the impact of the 2025 law on 2026 taxes will be modest. The child tax credit will increase slightly from $2,000 to $2,200 per child, and the standard deduction will rise to $15,750 for single filers and $31,500 for joint filers, adjusted for inflation. New provisions for tips and overtime may also reduce taxes for some. However, lower-income families could face higher taxes due to the expiration of health insurance premium tax credits, which were not extended.
The White House did not respond to requests for comment before publication.
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