Legislation Enacted in the First Session of the 119th Congress That Affects Mandatory Spending or Revenues

Roughly three-quarters of federal spending over the next 10 years (excluding interest payments) will be mandatory, or direct, spending. Direct spending consists of spending for some federal benefit programs and certain other payments to people, businesses, nonprofit institutions, and state and local governments. It is governed by statutory criteria and is not normally controlled by the annual appropriation process. The House and Senate may adopt rules that aim to ensure that legislation affecting direct spending or revenues does not increase federal budget deficits over specified time periods. The Congressional Budget Office provides estimates that the Congress can use to help enforce those rules.

This report summarizes CBO’s estimates of the effects on direct spending and revenues of authorizing legislation enacted during the first session of the 119th Congress. The first session ran from January 3, 2025, to January 3, 2026. In keeping with long-standing practice, this report and its associated tables also incorporate the estimated effects on revenues of provisions in most of the appropriation legislation enacted during that period.1

As estimated by CBO and staff of the Joint Committee on Taxation, the effects of those laws on direct spending and revenues will increase the cumulative deficit by $3.5 trillion over the 2025–2034 period.2 That increase in the deficit is the net result of a $1.1 trillion reduction in outlays and a $4.6 trillion decrease in revenues (see Table 1). That total does not include the increase in interest costs associated with financing the larger deficit.

Most of that increase in the deficit over the 2025–2034 period—a total of $3.4 trillion—is attributable to the 2025 reconciliation act (Public Law 119-21).3 That law affected the way that individuals and businesses are taxed and reduced taxes for a significant number of households, resulting in an estimated $4.5 trillion decrease in revenues. It also reduced spending by modifying many federal programs, including Medicaid, the Supplemental Nutrition Assistance Program, and the federal student loan program, and it provided additional funding for defense, homeland security, and immigration enforcement, which partly offset those effects. CBO estimates that, on net, the law will reduce direct spending by nearly $1.1 trillion.

The law with the next-largest budgetary effects—the Full-Year Continuing Appropriations and Extensions Act, 2025 (P.L. 119-4)—will increase the deficit over the 2025–2034 period by $66 billion, CBO estimates.4 That overall net increase in the deficit results almost entirely from reductions in revenues due to rescissions of enforcement-related funding that was provided to the Internal Revenue Service (IRS) in the 2022 reconciliation act (P.L. 117-169). (Rescissions are provisions of law that cancel budget authority previously provided to federal agencies before it would otherwise expire.)5 Specifically, sections 1101(5) and 1101(8) of P.L. 119-4 (which continued, for the duration of 2025, amounts and authorities contained in two of the annual appropriation acts for 2024) rescind a total of $20.2 billion in enforcement-related funding for the IRS. CBO anticipates that the rescissions will result in fewer enforcement actions by the IRS and, thus, smaller revenue collections.

For purposes of Congressional budget enforcement, reductions in budget authority and outlays attributable to rescissions contained in appropriation acts are treated as reductions in discretionary spending and are incorporated into the cost estimates for those acts. Therefore, the reductions in budget authority and outlays stemming from the rescissions of IRS funding in P.L. 119-4 are excluded from this report, but the resulting effects on revenues are included.

Other laws enacted during the first session of the 119th Congress will have much smaller budgetary effects.

CBO prepared its estimate for each piece of legislation when it was last considered by the Congress, measuring its budgetary effects against the baseline projections used for budget enforcement purposes by the House and Senate Committees on the Budget.6 The estimates do not include subsequent changes that were made as part of CBO’s updates to its baseline projections and generally do not incorporate budgetary effects stemming from macro­economic consequences (that is, changes in the total output of the economy). For consistency, each estimate covers the same period that CBO used when preparing the corresponding cost estimate during the session.

Two supplemental tables that provide details about the estimated budgetary effects of each law are posted with this report (see www.cbo.gov/publication/62203#data).

Supplemental Table 1 lists the 20 laws enacted during the first session of the 119th Congress that have significant budgetary effects, their date of enactment, and their estimated effects. Each entry includes the number of the underlying bill and, when possible, a link to the relevant cost estimate on CBO’s website. The amounts in a referenced cost estimate may differ from the amounts shown in the table because the enacted version of the bill may differ from the version CBO analyzed for the published estimate.

Supplemental Table 2 lists the 13 laws enacted during the first session of the 119th Congress that CBO estimated will have insignificant budgetary effects (that is, they will increase or decrease annual and cumulative deficits over the 2025–2035 period by less than $500,000). Those laws are also listed by their date of enactment. Laws that were estimated to have no budgetary effects are not listed.