**House Ways and Means Committee Tax Bill to Increase Deficit by $3.3 Trillion through 2034**

The House Ways and Means Committee has approved tax provisions that will significantly expand elements of the 2017 Tax Cuts and Jobs Act (TCJA). An analysis by the Penn Wharton Budget Model (PWBM) estimates that these changes would escalate primary deficits by approximately $4.6 trillion over the next decade. Combined with additional deficit increases of $321 billion from changes proposed by three other committees, the total increase in primary deficits would reach about $3.3 trillion after accounting for offsetting spending cuts.

This legislative package, which forms part of the Fiscal Year 2025 House reconciliation bill, proposes to extend and enhance several key provisions of the TCJA, including individual and estate tax provisions. Notable changes include a temporary increase in the child tax credit, an additional inflation adjustment for tax brackets and the standard deduction, and a permanent enhancement to the section 199A deduction for qualified business income.

Despite increasing national debt by 7.2% in the next ten years and by 12% over thirty years, the proposal is projected to boost GDP by 0.5% and 1.7% over the same respective periods. However, these economic gains are offset by harsher impacts on lower-income households, who are expected to experience decreased benefits from social safety net programs due to spending cuts.

The bill also features a series of new individual tax provisions, including temporary deductions for qualified tip income, overtime pay, and auto loan interest, all of which expire after 2028. Additionally, the legislation introduces a new bonus deduction for individuals aged 65 and older, which also features a phased-out threshold based on adjusted gross income.

The PWBM notes that households in the lowest income quintile will see a net loss of about $1,035 in 2026 due to the combined effect of reduced taxes and cuts to transfers such as Medicaid and SNAP. Conversely, those in the top 10% of the income distribution, who already pay about 70% of all federal taxes, are set to benefit the most, receiving about 65% of the total value of the legislation.

Further fiscal implications include modified business and international tax provisions, with special focus on cost recovery rules and temporary extensions of certain tax deductions. These modifications are intended to encourage investment and economic activity, though their long-term sustainability and impact on revenue remain in question.

The final approval of this comprehensive tax proposal will depend on the reconciliation process and subsequent actions by Congress. With an aim to increase savings and labor supply, such significant changes to tax policy underscore ongoing debates on how best to balance economic growth with fiscal responsibility.