CBO Projects Stronger Economic Growth Through 2028 Thanks To Trump Tax BillJohn Carney 15 Sep 2025
The U.S. economy is projected to grow at a faster pace over the next three years thanks to recent tax cuts and spending measures by the Republican majorities on Capitol Hill and signed into law by President Donald Trump, the Congressional Budget Office said Friday.
The nonpartisan agency now expects the economy to be larger through 2028 than it projected in January, with real gross domestic product ending the forecast period 0.1 percent higher than previously estimated. The upward revision reflects the net positive impact of three major policy changes: the 2025 reconciliation act, new tariffs on roughly 75 percent of imported goods, and reduced immigration levels.
GDP growth is projected to reach 2.2 percent in 2026, up from the 1.8 percent the CBO forecast in January, driven primarily by the sweeping tax legislation known as the One Big Beautiful Act that was championed by President Donald Trump and passed by Congress on a party-line vote. The law permanently extended individual income tax cuts and allowed businesses to immediately expense equipment, research and development costs. The agency expects these measures to strengthen consumer spending and encourage private investment while federal spending on defense and immigration enforcement adds further stimulus.
“The reconciliation act’s effects boosting growth dominate the effects slowing it that stem from the reduction in net immigration” in 2026, the CBO said in its report. The report refers to the recent tax law as the reconciliation act.
The improved 2026 outlook follows a projected slowdown to 1.4 percent growth in 2025, down from an earlier estimate of 1.9 percent, as tariffs temporarily dampen consumer spending and business investment. The agency expects inflation to rise to 3.1 percent this year before falling to 2.4 percent in 2026 and reaching the Federal Reserve’s two percent target by 2027.
Unemployment is forecast to peak at 4.5 percent in the fourth quarter of 2025, then improve to 4.2 percent in 2026 as the tax law’s incentives for work and investment take effect. The jobless rate is expected to level off at 4.4 percent in 2027 and 2028.
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