On July 4, 2025, the budget reconciliation bill, Public Law 119-21, informally known as the One Big Beautiful Bill Act (OBBBA), was signed into law. The bill includes substantial changes to both social safety net programs and tax policies. Some bill elements, like tax rate reductions and an increase in the child tax credit, leave many families better off than without the legislation. But the bill also makes numerous changes to programs that provide key supports to families in poverty and near poverty, including new work requirements (“community engagement”) in Medicaid, expanded work requirements for the Supplemental Nutrition Assistance Program (SNAP), more frequent recertification for a portion of Medicaid enrollees, elimination of an enrollment option for Premium Tax Credits (PTCs), limitations on annual SNAP benefit increases, and a policy making some noncitizens ineligible for SNAP, Medicaid, and PTCs. The bill also, for the first time, makes states responsible for a share of SNAP benefit costs if their error rates exceed 6 percent, increases the state share of SNAP administrative costs, and limits a key state funding mechanism for Medicaid. Increased fiscal pressures could lead states to make further administrative or policy changes that could result in lower caseloads or benefits.

This analysis takes all those changes into account, including the direct changes and the potential additional state changes, to estimate impacts for families, with a focus on families with the lowest incomes. We consider which families gain or lose resources, how much they gain or lose, and how that affects the number of people in poverty. We estimate that the number of people in deep poverty would rise by about a quarter, or 3.4 million, including an increase of 35 percent (0.8 million) for children.

Why This Matters

Earlier analysis has demonstrated the distributional impacts of OBBBA—that resource losses occur mainly among lower-income families and resource gains among higher-income families. This analysis builds on prior work and considers new research and the most recent administrative data. We estimate the dollar value of resource losses and changes in poverty status, and we provide estimates at the state level and for families with different characteristics. The findings provide a base estimate for considering the real-world changes in families’ economic well-being as the OBBBA is fully implemented in the upcoming years.

What We Found

When we consider both the direct impacts of the bill and the likely impacts of potential additional state administrative and policy responses, we estimate the following:

• The number of people living in deep poverty rises by 24 percent overall ( 3.4 million); 35 percent more children (0.8 million) are estimated to be in deep poverty.
• Among families in poverty, an estimated 55 percent (13.8 million) lose resources, while less than half that number, 20 percent (5.0 million), gain resources.
• For families in poverty, resource losses far outweigh gains, with an average annual estimated loss of $3,314, compared with an average annual gain of $614.
• More than half (52 percent) of all families losing resources are in poverty, compared with only 5 percent of those gaining resources. Overall, an estimated 99.1 million families gain resources, with an average gain of $2,951, and 26.1 million families lose resources—for an average loss of $3,040. 

Focusing on OBBBA’s direct impacts (without potential additional state responses) we estimate the following:

• Many families with working members lose resources. Among families in poverty and with at least one full-year full-time worker, 32 percent lose resources, with an average loss of $3,340.
• Among families in poverty, families in nonmetropolitan areas are more likely to experience a loss of resources and less likely to experience a gain than families in metropolitan areas.
• Results vary across states, but families in poverty are more likely to lose than gain resources due to OBBBA in all states.

How We Did It

We used the Analysis of Transfers, Taxes, and Income Security (ATTIS) microsimulation model to estimate the combined impact of key benefit and tax policy changes in the OBBBA. ATTIS uses the information on US households in the American Community Survey, and it includes highly detailed representations of all the major tax and benefit programs. We estimate the bill’s impact by comparing families’ resources under the OBBBA with their resources under the system of safety net programs, taxes, and tax credits if the OBBBA had not been passed, and assuming the Tax Cuts and Jobs Act provisions expire as scheduled. Poverty is assessed using the Supplemental Poverty Measure (SPM). The SPM’s resource measure captures the impacts of non-cash benefits, taxes, and tax credits as well as cash in assessing a family’s economic well-being.