On August 21, U.S. Vice President JD Vance embarked on a campaign to promote President Donald Trump’s recent legislative victory, the One Big Beautiful Bill Act, which focuses on tax cuts and spending measures.
The act has made headlines by permanently extending tax cuts first established in a 2017 law signed by President Trump, which were set to expire at the end of 2025 if Congress had not intervened.
In addition to extending these tax cuts, the One Big Beautiful Bill Act introduces new tax breaks for tips, overtime, and seniors aged 65 and older.
Speaking to supporters in Peachtree City, located near Atlanta, Vance declared, “We had the biggest tax cut for families that this country has ever seen.”
However, the claim that these tax cuts represent the largest in U.S. history is misleading.
Historical analysis shows that while significant, the 2025 tax cuts rank either as the third-largest since 1980 or tied for seventh, depending on the metrics used for evaluation.
This comes as many Americans may not see substantial changes to their tax bills beginning in 2026.
The reason for this is that the 2025 law chiefly extends existing tax cuts rather than introducing sweeping new reductions.
As of now, the Biden administration has not publicly responded to the promotion of these legislative accomplishments.
When reviewing major tax legislation since 1980, most prior tax laws have either increased taxes or resulted in only modest cuts.
In assessing tax cut laws, we focused on the tax revenue decreases as a percentage of the gross domestic product (GDP), providing a more standardized view that accounts for inflation over time.
Additionally, we compared cumulative tax savings during the first five years after a law’s implementation to gauge their true financial impact.
The most significant tax cuts were those enshrined in 1981 legislation passed by a Democratic Congress and signed by President Ronald Reagan, achieving a reduction of 3.5 percent of the nation’s cumulative five-year GDP.
Following that, a 2012 tax bill, which lowered taxes by 1.7 percent of GDP, was enacted by a Republican Congress under President Barack Obama and extended the tax cuts initially established in 2003 under President George W. Bush.
Based on current projections, Trump’s 2025 law places third in this ranking, accounting for 1.4 percent of GDP when factoring in the earlier tax cuts from 2017.
The 2017 tax law holds the fourth position at 1 percent, tying with a 2010 bill that also focused on extending Bush’s 2001 tax cuts.
The tax cuts from Bush’s 2001 and 2003 legislation are positioned sixth and seventh, with reductions of 0.7 percent and 0.5 percent, respectively.
If analyzed solely in terms of new tax cuts and excluding the reenactment of the 2017 tax cuts, Trump’s 2025 law would tie for seventh at 0.5 percent of GDP.
Joseph Rosenberg, a senior fellow at the Urban Institute-Brookings Institution Tax Policy Center, emphasized that evaluating the scale of the 2025 tax cuts can be done in either of the aforementioned ways.
Looking forward to 2026, Americans may experience a disconnect between the historical significance of the tax law and their personal financial situations.
Many families have already been benefiting from the lowered rates since the introduction of the cuts in 2017, and thus may not perceive any substantial alterations to their tax liabilities.
Margot Crandall-Hollick, a principal research associate at the Urban-Brookings Tax Policy Center, noted that families will observe an increased child tax credit—rising from $2,000 to $2,200 per child.
Moreover, some may enjoy minor tax reductions due to the changes in tips and overtime calculus, as well as a slightly elevated standard deduction that will now be set at $15,750 for single filers and $31,500 for joint filers in 2025.
This deduction will also be adjusted annually for inflation.
Nevertheless, Crandall-Hollick cautioned that certain families, particularly those with lower incomes, may end up facing higher tax liabilities due to the expiration of health insurance premium tax credits that were not extended under the One Big Beautiful Bill Act.
image source from：aljazeera
