Thirteen million families will lose an average of £260 each year because of the change to working-age benefits, the Institute for Fiscal Studies (IFS) has said.
Reacting to the first all-Conservative Budget in 19 years, the IFS said it was "regressive" and had taken "much more" from the poor than the rich.
George Osborne earlier defended his Budget, saying it represented a "new contract" for Britain.
George Osborne has been accused of pulling the rug from underneath working people who will be hit hard by his latest Budget.
Shadow chancellor Chris Leslie said Labour was "delighted" the Chancellor wanted to "steal" some of their manifesto policies but accused the Treasury of hiding the true impact on families.
"The difficulty with the Chancellor's position though is that he is not bringing in those increases in wages in time for the pulling of the rug from underneath hundreds of thousands of working people with the introduction of what is effectively a work penalty into the tax system," he said.
"Do not under-estimate how important those tax credits have been for many, many people.
"It will really hit working families hard."
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