What Trump’s tax policies mean for the national debt

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Laura Altizer asks: 

What has Trump done for taxes, and how exactly has that helped or hindered the national debt?

The price tag for the One Big Beautiful Bill Act: an estimated $3.4 trillion to $4.5 trillion in additional debt over the next decade.

The sweeping legislation, which passed in July, renewed the 2017 tax cuts for individuals and granted additional tax breaks, including temporary provisions that allow workers to deduct tips and overtime pay up to a certain amount on their federal income taxes. 

These new and extended tax breaks alone will cost an estimated $4.5 trillion over the next decade, according to estimates put forth by the Congressional Budget Office and the Joint Committee on Taxation. The massive bill also includes major expenses for increased immigration enforcement and border security, raising the deficit by $175 billion over 10 years. The deficit is the annual difference between the amount the government spends and the amount of revenue the government rakes in, while the national debt is the cumulative total of all past deficits and surpluses.

The bill does entail tax policies that will reduce the deficit. For example, it repeals clean energy tax credits that were implemented under the Biden administration’s Inflation Reduction Act, a move that will decrease the deficit by $543 billion

But scaling back some tax provisions and reducing expenditures on benefits like the Supplemental Nutrition Assistance Program (SNAP) won’t be enough to compensate for the total cost of the bill. Those trillions of dollars will be added to the total national debt, which has hit $38 trillion. 

That $3 trillion to $4 trillion is “a lot of money,” said Joe Rosenberg, a senior fellow at the Urban-Brookings Tax Policy Center, a nonpartisan think tank. 

For scale, that’s close to the $5 trillion in total revenue the government collected in 2025, Rosenberg noted. 

The bill will boost economic growth in the short term since lower taxes mean people have more money to spend, according to a TPC analysis. But multiple factors will “temper” that growth, according to the TPC. For example, the tax cuts will benefit high-income households the most, and this group tends to save extra income instead of spending it. And the Federal Reserve will be more likely to maintain higher interest rates to stop the economy from overheating.

And in general, when the government borrows money, that can lead to higher interest rates. 

“If deficits are higher, [the] Treasury must sell more bonds to pay for that increased spending. Then to attract enough buyers, the government may have to offer higher interest rates and Treasury rates are a benchmark for the whole economy, so business loans, mortgages, and other rates tend to rise,” said Robert Duquette, a professor at Lehigh University’s College of Business. 

That’s not just because these rates are tied to the federal rate, but also because creditors will demand a higher rate since they could otherwise get a risk-free rate from the Treasury, Duquette explained. 

“When loans get more expensive, some businesses delay or cancel expansions, and some families can’t afford the same house or car,” Duquette said.