PAYGO Report: Budget Balanced, No Ax Falling
Published Date: 1/28/2026
Notice
Summary
The 2025 PAYGO report shows that new laws passed in 2025 didn’t add to the federal budget deficit, so no spending cuts (sequestration) are needed. This means the government’s budget stayed balanced for fiscal year 2026, thanks to some special rules that reset the budget numbers to zero. Lawmakers and taxpayers can breathe easy—no surprise budget cuts are coming soon!
Analyzed Economic Effects
3 provisions identified: 2 benefits, 0 costs, 1 mixed.
Working Families Tax Cut Extension ($1.4T)
Public Law 119-21, the Working Families Tax Cut Act, extended tax cuts originally enacted in the Tax Cuts and Jobs Act of 2017. The Administration's entry on the PAYGO scorecards reflects this act as savings of $1.4 trillion over the budget window.
No PAYGO Sequestration for FY2026
The OMB PAYGO report says laws enacted in 2025 did not create a debit on the 5-year or 10-year PAYGO scorecards, so a PAYGO sequestration order under the PAYGO Act is not required for the budget year, fiscal year 2026. Public Law 119-37 set the balances on both PAYGO scorecards to zero, which removed the trigger for automatic sequestration.
IRS Enforcement Funding Rescission of $20.2B
Division A of Public Law 119-4 rescinded $20.2 billion in funding for IRS enforcement and compliance activities. OMB states this rescission is estimated to result in decreases to revenue collections and that the resulting revenue decrease is excluded from the PAYGO scorecards under established scoring rules.
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