Key Methods That CBO Used to Estimate the Macroeconomic Effects of the 2025 Reconciliation Act: Working Paper 2026-01

Public Law 119-21, referred to here as the 2025 reconciliation act, included a wide range of provisions that affect policies governing federal revenues and spending. This paper describes the key methods that the Congressional Budget Office used to estimate the law's macroeconomic effects. For each of the law's provisions, CBO identified key channels through which the U.S. economy would be affected and then translated those effects into inputs for its analytical models. For cases in which those inputs could be incorporated into CBO's existing modeling approaches, this paper refers readers to the agency's previous work describing those approaches. For cases in which new methods were needed to evaluate the law's macroeconomic effects, those methods are described in greater detail.