What Will a Second Trump Term Mean for Your Money? Experts Weigh In
During the presidential election, the economy is a top concern for voters. According to a September Pew Research Center poll, Economic ranking exceeds Health care, foreign policy and crime are top issues.
We all want to know how President-elect Donald Trump’s policies will affect our finances over the next four years. Not all of Trump’s policies have been spelled out in detail, and many of his proposals require congressional approval before they can be implemented. While it’s impossible to know all the answers, experts say here’s what we can expect from Trump’s next term, which begins on January 20, 2025.
Tariffs and mass deportations could drive up prices
The president-elect has been vocal about two plans: high tariffs on imported goods and mass deportations of illegal immigrants. If the government implements one or both of these, prices in the U.S. could surge.
Tariffs raise the cost of directly imported products and imported supplies used in U.S. manufacturing, amounting to a tax on consumption. Usha KhaliProfessor at Wichita State University and expert on trade with China.
Haley said: “Trump proposes to impose a 60% tariff on all products imported from China and a 20% tariff on products imported from other countries, which will increase the costs for end users upstream and downstream of the supply chain.” Although companies There may be some impact from lower profit margins, but importers will typically pass on some of the tax costs to consumers in the form of higher prices.
Mass evictions could also drive up prices due to their significant impact on labor. David AndersonBlazer is a professor of economics and business at Central College in Danville, Kentucky.
“Immigration is critical to industries such as agriculture, health care, construction, food services and transportation,” Anderson said. “Few workers in these and other fields will put upward pressure on labor costs and prices.”
Inflation, the rate at which the price of consumer goods and services changes over a year, rose to record levels after the outbreak. Inflation has been rising following the Federal Reserve’s aggressive post-pandemic rate hikes that began in 2021. Come back slowly The central bank’s annual target interest rate is 2%. However, after years of rate hikes, prices remain high.
The Fed is preparing to push further Cut the federal funds rate This will reduce borrowing costs by 2025. But if tariffs and mass deportations fuel inflation, rates are likely to remain high in the short term.
Some tax cuts will be extended, others may disappear
Most experts expect Trump to extend and possibly expand Tax Cuts and Jobs Act of 2017expected to expire in 2025.
The TCJA was passed in January 2018 during the first Trump administration. some noteworthy tax relief Those still valid include:
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Reduce personal income tax rates. When you pay income tax, you will pay one of seven rates, depending on your income tax brackets. The TCJA reduced five of seven tax rates.
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Higher deduction standards. most taxpayers Claim the standard deduction. The TCJA nearly doubles the amount you receive.
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Increase the child tax credit. you can receive Up to $2,000 via CTCup from the previous $1,000.
While the TCJA lowered taxes for many households, according to one person, most of the benefits of extending the tax law would go to those making $450,000 or more. recent reports By Tax Policy Center. The report found that about 75% of households would see some form of tax cut, but 45% of the policy’s tax cuts would benefit higher earners.
However, the incoming administration does not intend to extend all tax breaks. Other tax reliefs, e.g. Electric vehicle tax credityou can reduce your tax bill by $7,500 when you purchase a qualifying electric vehicle, Likely to be eliminated.
Other tax plans, like what Trump says proposal Offering “significant tax cuts” to workers and eliminating the tip tax are less clear.
Social Security benefits may be in jeopardy
Trump also proposed eliminating taxes on Social Security benefits. While this may provide short-term relief to those Receive SSI benefitsIt would also harm workers by depleting Social Security funds, according to the Tax Policy Center.
For those of you approaching retirement or planning ahead, experts don’t recommend relying solely on Social Security to fund your future. Instead, save part of your monthly paycheck Tax-Advantaged Retirement Planssuch as a 401(k) or individual retirement account. new retirement rules Security 2.0 Act In 2025, it may be easier for you to save for the future.
Student loan forgiveness and other benefits may disappear
Building on Trump’s last term and Republican backlash against student debt relief, experts predict the incoming administration will student loan program. The Biden administration’s policies are unlikely to move forward as Republican state leaders lead efforts to block court clemency. savings plan or “Plan B” Broad Student Loan Forgiveness effort.
Elaine Rubin, a student loan and policy expert at Edvisor and a member of CNET’s expert review committee, said the SAVE program is at risk under Trump.
“We do not expect the Trump administration to engage in a legal battle to maintain SAVE or authorize broad clemency,” Rubin said. If SAVE is overturned before January 20, Rubin believes the Biden administration will not have enough time to succeed. Appeal the decision.
Rubin advises borrowers to keep a close eye on loan repayment status as court cases progress, especially if the cases are not resolved before Trump takes office. She also suggested reviewing other income-driven repayment plans now in case SAVE is rejected.
Plan 2025 is a far-right conservative blueprint that proposes ending popular forgiveness programs, eliminating the Department of Education and privatizing student loans. Despite Trump Denies any connection to the proposal During his campaign, he has since Some of the program’s contributors were appointed held important positions in his government. Trump also promised Campaign to shut down Department of Educationthis bill needs the support of Congress.
Rubin said many parts of the 2025 plan regarding public education, including eliminating the Department of Education, are highly speculative. “It’s unclear whether he will get the votes needed to make any or some of the changes,” Rubin said.
