CBO’s Current View of the Economy From 2025 to 2028

The Congressional Budget Office periodically updates its economic forecast to reflect changes in laws that affect revenues and spending, recent economic developments, and updated demographic projections. This report explains recent changes that have affected CBO’s projections and provides details about the agency’s latest economic forecast—namely, its projections of output, the labor market, inflation, interest rates, and trade flows through 2028. Those projections reflect tariffs implemented as of August 19, 2025; other administrative actions taken as of August 28, 2025; and economic developments and laws put in place as of September 2, 2025. They also reflect CBO’s updated demographic projections, which are based on laws and policies in place as of July 31, 2025, and which do not incorporate the effects of subsequent administrative or judicial actions, including those affecting immigration.

Early next year, the agency will publish its economic projections for 2026 to 2036 as part of The Budget and Economic Outlook. That publication will also provide updated projections of federal outlays and revenues, which are not included in this report.

Changes in CBO’s Economic Projections Since January 2025

CBO’s latest economic projections reflect several substantial changes in federal policy and economic developments that have occurred since the agency last published its projections on January 17, 2025, at the end of the previous Administration.1 In accordance with the Congressional Budget Act of 1974, as amended, those projections did not account for any expectations about future changes in laws or policies.2

The major factors underlying most of the changes in CBO’s projections are the 2025 reconciliation act (Public Law 119-21), higher tariffs, and lower net immigration (the number of people who enter the United States in a given period minus the number who leave in that period).3 CBO’s updated projections also reflect interactions among those factors as well as data released since January. Those data include equity prices and inflation that were higher, and residential investment that was weaker, than in CBO’s January projections—reflecting, in part, higher interest rates and a slower rate of household formation than previously projected.

The pattern of economic growth over the next several years reflects differences in the timing of the effects on the economy of the reconciliation act and of the changes in tariffs and net immigration:

• In 2025, the growth of real gross domestic product (GDP)—that is, the nation’s economic output adjusted to remove the effects of changes in prices—is 0.5 percentage points lower in CBO’s current projections than it was in the agency’s January 2025 projections, primarily because the negative effects on output stemming from new tariffs and lower net immigration more than offset the positive effects of provisions of the reconciliation act this year (see Figure 1).
• In 2026, the reconciliation act’s effects boosting growth dominate the effects slowing it that stem from the reduction in net immigration. Waning of the elevated uncertainty about trade policy provides modest support to economic growth next year as supply chains begin to adjust to the higher tariffs. Growth next year is 0.4 percentage points higher than in the previous projections, reflecting the reconciliation act’s boost to consumption, private investment, and federal purchases and the diminishing effects of uncertainty about U.S. trade policy.
• In 2027 and 2028, the effects of reduced net immigration on the labor force and the waning of the reconciliation act’s near-term boost to demand act as a drag on growth. Partially offsetting those effects, an increase in domestic production, driven by higher tariffs, provides a boost to economic growth. As a result, real GDP growth in those years is roughly the same as it was in CBO’s January 2025 projections.
• At the end of 2028, the level of real GDP is about 0.1 percent higher than it was in CBO’s January 2025 projections because of the economic effects of the reconciliation act, higher tariffs, and lower net immigration; the effects of interactions among those factors; and adjustments to reflect recently published data.

  Figure 1.

  Growth of Real GDP in CBO’s January 2025 and September 2025 Projections

  Percent

  

  Real GDP growth in CBO’s current projections differs from that in the agency’s January 2025 projections mainly because of the 2025 reconciliation act and higher tariffs and lower net immigration than previously projected.

  Notes

  Data sources: Congressional Budget Office; Bureau of Economic Analysis. See www.cbo.gov/publication/61236#data.

  Real GDP is nominal GDP that has been adjusted to remove the effects of changes in prices. Growth of real GDP is measured from the fourth quarter of one calendar year to the fourth quarter of the next year.

  Recessions, which begin just after a peak in economic activity and run through the subsequent trough, are plotted using monthly data; all other data are annual and are plotted at the midpoint (July 1) of each year.

  GDP = gross domestic product.

In the near term, which is the focus of this report, the net effects of the 2025 reconciliation act, higher tariffs, and lower net immigration on aggregate demand and the labor supply drive most of the changes in the agency’s forecast (see Table 1). After 2028, those three factors affect the economy mainly by changing real potential output, or the maximum sustainable level of production, which depends on the labor supply, the capital stock (that is, the stock of tangible and intangible productive assets, such as factories and computer software, used to produce goods and services), and total factor productivity (TFP, the average real output per combined unit of labor and capital, excluding the effects of cyclical changes in the economy).

2025 Reconciliation Act

CBO’s current forecast reflects the budgetary and economic effects of the 2025 reconciliation act, which reduced taxes for the vast majority of households.4 By contrast, the agency’s January 2025 projections reflected the scheduled expiration of temporary provisions of the 2017 tax act (P. L. 115-97)—including the expiration at the end of 2025 of most provisions affecting individual income taxes and the phaseout by the end of 2026 of the provision that allows businesses to immediately expense (that is, deduct from their taxable income) a portion of the cost of certain investments. The expiration of those provisions would have increased federal income taxes for most households and, in the near term, dampened business investment.

The 2025 reconciliation act permanently extended expiring individual income tax provisions and changed the tax code to permanently allow for the full expensing of certain capital investments, including investments in equipment as well as those in research and development. In addition, the law added temporary tax measures (such as changes to the treatment of qualified income from tips, overtime pay, state and local taxes, passenger vehicle loan interest and the costs of certain manufacturing structures, and the enhanced deduction for taxpayers age 65 and older), modified various federal programs (including Medicaid, student loans, and the Supplemental Nutrition Assistance Program, or SNAP), and provided additional funding for defense and immigration-­related activities.5

Taken together, provisions in the 2025 reconciliation act are projected to boost employment, income, consumer spending, business investment, and potential output in the near term. As a result of those effects, the U.S. economy from 2025 to 2028 is larger than it otherwise would have been. After 2028, as potential output growth (which, in CBO’s assessment, is driven mainly by increases in productivity and population growth) slows and returns to its longer-run trend, the level of real potential output remains above what it would have been without the 2025 reconciliation act. That higher level of potential output reflects offsetting effects on the capital stock: Tax incentives and greater labor supply encourage investment, but considered on its own, the law leaves investment lower in the longer run in CBO’s projections because larger deficits and higher interest rates reduce, or “crowd out,” private investment. (Additional revenues from higher tariffs, discussed below, would largely offset the negative effects associated with that crowding out.)

On their own, the policy changes stemming from the reconciliation act led CBO to increase its projections of economic growth in 2025 and 2026, which previously reflected the scheduled expiration of temporary provisions of the 2017 tax act. Households’ higher after-tax income, more favorable tax treatment of investment for businesses, and increased federal spending on defense, border security, and immigration enforcement under the reconciliation act increase the overall demand for goods and services in CBO’s current projections. That increased aggregate demand creates inflationary pressure, prompting the Federal Reserve to lower interest rates more slowly than it otherwise would; as a result, the boost to demand subsides after 2026, acting as a drag on real GDP growth in 2027 and 2028.

In addition to boosting aggregate demand in the near term, the law will, in CBO’s assessment, raise real potential output by increasing the supply of labor, the capital stock, and TFP. On its own, the law increases the agency’s projections of the labor supply, on net. The lower tax rates on labor income (which were previously scheduled to increase in 2026) are the primary driver of the increase in the labor supply. Additionally, the work requirements that the reconciliation act put in place for certain Medicaid and SNAP recipients and the law’s temporary changes to the treatment of qualified tip income, overtime pay, and state and local taxes are expected to encourage some workers to work more hours and other people to enter the labor force.

Those positive effects on the labor supply are partially offset in CBO’s projections by the reduction in the labor supply brought about by the additional funding that the law provided for immigration enforcement activities that, in the agency’s estimation, will increase the number of immigrants detained and removed from the country.6 (In CBO’s assessment, the administrative actions related to immigration taken since January have a much larger impact on net immigration—and, in turn, on the labor supply—than the provisions of the reconciliation act; those administrative actions are discussed below.)

Real potential output is also affected by the change in the capital stock that results from changes in private investment. The reconciliation act affects private investment in CBO’s projections through three major channels:

• On net, provisions of the law create incentives for additional private investment. The largest effects stem from tax provisions that allow businesses to expense the cost of equipment, research and development, some software, and manufacturing structures and from provisions that facilitate oil and gas production. Some provisions reduce residential investment by lowering the number of households that itemize deductions and by limiting the deductibility of property taxes and mortgage interest, partially offsetting the increase in nonresidential investment.
• The law’s boost to the labor supply spurs additional private investment because a larger labor supply increases returns on investment.
• The law, considered by itself, would increase deficits, thereby reducing the amount of funds available for private investment and putting upward pressure on interest rates. (The overall changes in deficits, as well as their effect on the resources available for private investment, depend on other factors, including tariffs and changes in net immigration, which are discussed below.) Those higher rates would crowd out private investment.

Overall, the net effect on private investment from the reconciliation act considered on its own is positive over the 2025–2028 period but negative in later years, as crowding out from larger deficits and higher interest rates more than offsets the increase in investment from tax incentives and a larger labor supply.

The reconciliation act also had small net positive effects on CBO’s forecast of TFP growth. On its own, the law is estimated to spur TFP growth by increasing domestic oil and gas production, investment in physical infrastructure and research and development, and the quality of wireless services (because of the auctioning of licenses for the use of portions of the electromagnetic spectrum). Those effects are partially offset by lower educational attainment and fewer workers in science, technology, engineering, and mathematics fields (because of changes in higher education and an increase in immigration enforcement activities that reduce the number of workers).

Tariffs

Between January 6, 2025, and August 19, 2025, the Administration implemented new tariffs on a little more than 75 percent of all imported goods (measured as a share of the value of all U.S. imports in 2024).7 In CBO’s assessment, those changes in tariffs will, on net, reduce the size of the U.S. economy. In addition, businesses facing higher costs will, in CBO’s assessment, pass some of their costs on to consumers, putting temporary upward pressure on inflation.

That net reduction in output reflects the mix of higher tariffs’ negative and positive effects on the economy. In contrast to the provisions in the 2025 reconciliation act that create incentives for additional investment, such as the tax provisions that allow the full expensing of certain capital investments, higher tariffs reduce real investment in CBO’s projections by raising the cost of imported capital goods and other inputs to production for domestic businesses. Tariffs also reduce productivity by reallocating domestic resources to less productive uses—notably, the production of goods that were previously imported.

By reducing investment and productivity, higher tariffs reduce the productive capacity of the economy and slow the growth of potential output. Those reductions in output from higher tariffs are partially offset by greater domestic production in some import-competing industries and by an increase in the funds available for private investment as those higher tariffs reduce federal deficits.

Even as businesses and households have become more certain than they were in April about the tariffs they face, trade policy uncertainty remains higher than it was in January, when CBO last published economic projections. Uncertainty about U.S. trade policy, as measured by the Trade Policy Uncertainty Index, peaked in April 2025; that measure has since fallen but remains elevated compared with historical levels.8 CBO expects that the heightened uncertainty about the future path of trade policy will continue to delay investments and will reduce the total amount of investment over the 2025–2027 period compared with what it would have been in the absence of changes to tariffs and the accompanying uncertainty about trade policy.9

Because CBO’s projections reflect the assumption that the tariff policies in place as of August 19, 2025, remain in place throughout the projection period, the system of international trade becomes more settled over the period, and uncertainty is gradually resolved. In the agency’s projec­tions, importers update their expectations about U.S. trade policy and adjust their decision-making to reflect the increased certainty of higher tariffs. As a result, the effects of policy uncertainty dissipate over time and disappear by the end of 2027, returning investment to what it would have been without the uncertainty in trade policy.

Updated Demographic Projections

CBO’s January 2025 economic forecast was based on the demographic projections that the agency published that month.10 CBO has since updated those projections.11 In particular, the agency revised downward its forecast of net immigration over the next several years to account for administrative actions and immigration enforcement policies that have been put in place since January. For example, CBO lowered its projections of net immigration in 2025 to reflect administrative actions that require most people attempting to enter the country to wait outside the country before appearing in immigration court and that canceled certain humanitarian parole programs.

Those downward revisions to net immigration lowered projected labor force growth, thereby reducing the labor supply and, in turn, real potential output. The downward revisions to net immigration affect the agency’s projections of labor force growth through two main channels. First, the reduction in net immigration reduces the size of the working-age population (people between the ages of 16 and 64). Second, the reduction in net immigration slightly decreases the average labor force participation rate over the next several years in CBO’s projections.12

CBO’s Economic Projections

CBO’s current view of the economy reflects its latest projections of output, the labor market, inflation, interest rates, and trade flows. The agency develops its economic projections so that they fall in the middle of the range of likely outcomes under current law. Those projections are highly uncertain, and many factors—including future legislation or administrative actions—could cause actual outcomes to differ from them.

Output

The growth of real GDP is projected to slow from 2.5 percent in 2024 to 1.4 percent in 2025 (see Table 2). That decline reflects a slowdown in consumer spending that stems from the tariffs put in place this year: Those tariffs raise prices for consumer goods and services, thereby eroding the purchasing power of households; they also increase costs for businesses that use imported and import-competing inputs in production. In addition, a reduction in net immigration in 2025 leads to slower overall growth in consumer spending.

In 2026, real GDP growth rises to 2.2 percent in CBO’s projections. That growth is spurred by changes made by the 2025 reconciliation act, which reduces individual income tax liabilities and allows for the full expensing of certain capital investments. Those provisions are projected to strengthen consumer spending and encourage private investment. Furthermore, the additional federal funding for defense, border security, and immigration enforcement activities that the law provided increase real federal purchases of goods and services in 2026. At the same time, slowing growth in the civilian non­institutionalized population restrains overall growth in consumer spending.13

In 2027 and 2028, real GDP growth slows, averaging 1.8 percent annually. That slowdown in growth is the net result of several factors, including the lessening of the 2025 reconciliation act’s near-term boost to aggregate demand and the drag from slower labor force growth. Even as the growth rate moderates, the level of economic activity remains higher than it would have been without the 2025 reconciliation act, primarily because of the increased incentives to work and invest attributable to that law.

Changes made by the law that encourage work and additional investment—such as permanently lowering tax rates on labor income, allowing businesses to fully expense the cost of certain investments, and putting in place work requirements for certain Medicaid and SNAP recipients—increase the economy’s underlying potential growth rate over the next few years in CBO’s projections, driving potential output higher than it would have been otherwise. Lower effective marginal tax rates and work requirements permanently push up the level of real potential output by increasing the supply of labor over the next two years, but thereafter, their effects have little impact on the growth of potential output.14 That increase in the labor supply is partially offset by the reduction in net immigration that results from the law’s additional funding for immigration enforcement activities.

In addition to increasing the supply of labor, changes made by the 2025 reconciliation act also result in the capital stock’s being larger than it otherwise would have been by increasing incentives for investment. The effect on the capital stock is modest because the boost to business investment from the full expensing of the cost of equipment, research and development, some software, and manufacturing structures, though meaningful, is small relative to the size of the existing capital base. For example, in CBO’s projections, the law increases business fixed investment by the end of 2026 by nearly $100 billion, or 2.2 percent, but that additional investment increases the stock of nonresidential capital by only 0.25 percent. Furthermore, the effect on investment is reduced because small businesses could already expense such investment under the tax code and because some firms do not take full advantage of the ability to expense investment. The reconciliation act also changed the treatment of homeowners’ housing expenses. Those changes are expected to reduce residential investment in relation to what it would otherwise have been, offsetting some of the effect of increased nonresidential investment on overall investment.

Labor Market

Labor market conditions soften further in the second half of 2025 in CBO’s projections following weaker aggregate demand attributable to higher tariffs, recent sluggishness in the growth of nonfarm payroll employment, the slowdown in labor force growth, and the decline in net immigration. Those conditions are projected to improve in 2026 as the expansionary effects of the 2025 reconciliation act intensify and support stronger payroll growth over the year. In addition, the reconciliation act is expected to increase the supply of labor after 2025 because provisions that reduce the effective marginal tax rates on labor income, including the provisions that affect the treatment of qualified tip income, overtime pay, and state and local taxes, increase the incentive to work and thus boost nonfarm payroll employment. After 2026, that boost in nonfarm payroll employment is expected to diminish as the expansionary effects of the reconciliation act are tempered by slower growth in the civilian non­institutionalized population and by the weakening of the overall demand for goods and services.

In CBO’s projections, the unemployment rate is 4.5 percent in the fourth quarter of 2025. It falls to 4.2 percent in 2026 before ticking up to 4.4 percent in 2027; it then remains roughly unchanged through the end of 2028. The growth of nonfarm payroll employment slows in 2025, increases in 2026, and then declines in 2027 and 2028 as the near-term boost to labor demand from the 2025 reconciliation act begins to fade.

Inflation

Inflation rises in 2025 in CBO’s projections as higher tariffs put upward pressure on the cost of goods and inputs to production. The agency expects the tariffs’ effects on inflation to be temporary. Inflation eases in 2026 as the rise in inflation from tariffs recedes; that easing is partially offset by upward pressure on prices from the increase in aggregate demand for all goods and services that results from the 2025 reconciliation act. The inflation rate—as measured by the price index for personal consumption expenditures (PCE)—remains above the Federal Reserve’s goal of 2 percent until 2027. Inflation in the PCE price index falls from 3.1 percent in 2025 to 2.4 percent in 2026; it drops further—to 2.0 percent—in 2027 and remains at that rate in 2028.

Interest Rates

In CBO’s projections, interest rates begin to fall in the second half of 2025 after staying roughly flat in the first half of the year. The Federal Reserve is projected to lower the federal funds rate (that is, the interest rate that financial institutions charge each other for overnight loans of their monetary reserves) by 0.75 percentage points over the next five months—from 4.3 percent at the end of August 2025 to 3.6 percent at the end of January 2026—as the unemployment rate rises and inflation is expected to soften. After 2026, the federal funds rate declines slightly. It reaches 3.3 percent by the fourth quarter of 2027 and remains at that rate in 2028. The rate on 10-year Treasury notes falls, from 4.3 percent in the fourth quarter of 2025 to 3.9 percent in the fourth quarter of 2028, as it gradually adjusts to a decline in expected short-term interest rates.

Trade Flows

The increases in tariff rates implemented from January 6 to August 19 of this year are expected to curb U.S. imports and exports in the second half of this year and beyond. By elevating the cost of imported consumer goods and capital goods, tariffs reduce U.S. demand for imports. In CBO’s projections, real U.S. imports fall by 3.7 percent in 2025 and then decrease at an average annual rate of 0.2 percent from 2026 to 2028. Partially offsetting the reduction in imports that results from higher tariffs is an increase in the demand for imported computers and semiconductors that are needed for investments in data centers. Those investments, which have been rising over the past decade, have rapidly accelerated since early 2023.

In addition, real exports are projected to contract in 2025 and then to grow slowly in later years because of recent changes in tariff policy. U.S. tariffs raise the cost of imported goods that are used as inputs in domestic production and thus make some U.S. exports more costly and less competitive in international markets. Moreover, U.S. trading partners will, in CBO’s estimation, increase their tariffs. Those increases—although smaller than the increase in U.S. tariffs—reduce foreign demand for U.S. exports. Real U.S. exports shrink by 5.0 percent in 2025 in CBO’s projections because of changes in trade policy and weaker foreign demand for U.S. exports of travel services. In later years, export growth rebounds as supply chains adjust and dampen the cost increase attributable to tariffs and as the trade-weighted value of the U.S. dollar declines. Real exports increase at an average rate of 2.3 percent per year from 2026 to 2028.

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1. 1. Congressional Budget Office, The Budget and Economic Outlook: 2025 to 2035 (January 2025), www.cbo.gov/publication/60870, and Additional Information About the Economic Outlook: 2025 to 2035 (January 2025), www.cbo.gov/publication/61135.

2. 2. For explanations of the laws that govern how CBO prepares its baseline projections and the procedures the agency uses to do so, see Congressional Budget Office, CBO Explains How It Incorporates Administrative and Judicial Actions When Updating Its Baseline Projections and Preparing Cost Estimates (December 2024), www.cbo.gov/publication/60846, and CBO Explains How It Develops the Budget Baseline (April 2023), www.cbo.gov/publication/58916; and Robert W. Arnold, How CBO Produces Its 10-Year Economic Forecast, Working Paper 2018-02 (Congressional Budget Office, February 2018), www.cbo.gov/publication/53537.

3. 3. CBO’s updated economic projections also include the effects of the American Relief Act, 2025 (P.L. 118-158), and the Full-Year Continuing Appropriations and Extensions Act, 2025 (P.L. 119-4). Both of those laws increased CBO’s projections of federal purchases of goods and services relative to the amounts underlying the agency’s January 2025 economic forecast, which was finalized before the laws were enacted.

4. 4. For CBO’s estimate of the budgetary effects of the law, see Congressional Budget Office, “Estimated Budgetary Effects of Public Law 119-21, to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14, Relative to CBO’s January 2025 Baseline” (July 21, 2025), www.cbo.gov/publication/61570. For a discussion of how the law will affect households’ resources, see Congressional Budget Office, letter to the Honorable Brendan F. Boyle, the Honorable Hakeem Jeffries, the Honorable Jeff Merkley, and the Honorable Chuck Schumer about the distributional effects of Public Law 119-21 (August 11, 2025), www.cbo.gov/publication/61367.

5. 5. For a description of how the provisions in an earlier version of the enacted law, the House-passed version of H.R. 1, would have affected CBO’s estimates of economic activity, see Congressional Budget Office, dynamic estimate for H.R. 1, the One Big Beautiful Bill Act (June 17, 2025; revised June 18, 2025), www.cbo.gov/publication/61486. For a discussion of how several of the tax provisions in the House-passed version of H.R. 1 would have affected the supply of labor, see Joint Committee on Taxation, Macroeconomic Analysis of the Tax Provisions of the Budget Reconciliation Legislative Recommendations Related to Tax as Ordered Reported by the Committee on Ways and Means on May 14, 2025, JCX-25-25 (May 22, 2025), www.jct.gov/publications/2025/jcx-25-25. Several provisions of the enacted law—including certain provisions affecting taxes, Medicaid, and SNAP—differed from those in that earlier version. For example, multiple tax provisions for businesses were made permanent, including those allowing the full expensing of the cost of certain investments in the year in which they occur.

6. 6. For a detailed discussion of how the 2025 reconciliation act affected CBO’s demographic projections, see Congressional Budget Office, An Update to the Demographic Outlook, 2025 to 2055 (September 2025), Box 1, www.cbo.gov/publication/61390.

7. 7. When the Administration modifies tariffs through an administrative action, CBO’s projections reflect the assumption that the tariffs remain in effect permanently, without any changes. For more information, see Congressional Budget Office, “An Update About CBO’s Projections of the Budgetary Effects of Tariffs,” CBO Blog (August 22, 2025), www.cbo.gov/publication/61697.

8. 8. Dario Caldara and others, “The Economic Effects of Trade Policy Uncertainty,” Journal of Monetary Economics, vol. 109 (January 2020), pp. 38–59, https://doi.org/10.1016/j.jmoneco.2019.11.002; and Scott R. Baker, Nicholas Bloom, and Steven J. Davis, “Measuring Economic Policy Uncertainty,” Quarterly Journal of Economics, vol. 131, no. 4 (November 2016), pp. 1593–1636, https://doi.org/10.1093/qje/qjw024. For the data underlying CBO’s analysis of trade policy uncertainty, see Matteo Iacoviello, “Trade Policy Uncertainty (TPU) Index” (accessed August 28, 2025), www.matteoiacoviello.com/tpu.htm; and Economic Policy Uncertainty, “Trade Policy Uncertainty” (accessed August 28, 2025), www.policyuncertainty.com/trade_uncertainty.html.

9. 9. Congressional Budget Office, letter to the Honorable Chuck Schumer, the Honorable Ron Wyden, and the Honorable Jeff Merkley about the budgetary and economic effects of increases in tariffs implemented between January 6 and May 13, 2025 (June 4, 2025), www.cbo.gov/publication/61389.

10. 10. Congressional Budget Office, The Demographic Outlook: 2025 to 2055 (January 2025), www.cbo.gov/publication/60875.

11. 11. Congressional Budget Office, An Update to the Demographic Outlook, 2025 to 2055 (September 2025), www.cbo.gov/publication/61390.

12. 12. For a discussion of how immigration affects the labor force participation rate, see Congressional Budget Office, Effects of the Immigration Surge on the Federal Budget and the Economy (July 2024), www.cbo.gov/publication/60165.

13. 13. The civilian noninstitutionalized population consists of people age 16 or older who are not on active duty with the armed forces, in penal or mental institutions, or in homes for the elderly or infirm. People held in detention facilities are excluded from the agency’s projections of the civilian noninstitutionalized population (the population that the agency uses to project the size of the labor force).

14. 14. The effective marginal tax rate for individuals is the percentage of an additional dollar of earnings that is unavailable because it is paid in taxes or offset by reduced benefits from government programs.