In the 2024 elections, America chose Donald Trump as its 47th President-elect. For now, it’s not fully clear how his presidency will affect your personal finances and the overall economy. However, he made some promises during his campaign, based on which we can speculate what fulfilling those promises would mean for the overall economy.
Here’s what a Trump win means for your finances if he implements what he’s promised.
Key Takeaways
- Concerning taxes, Trump plans to make the 2017 tax cuts permanent, corporate tax rates lower, and the SALT deduction cap eliminated, potentially boosting disposable income but increasing the deficit.
- Higher inflation during Trump’s presidency could raise borrowing costs, while Trump loan policies may increase accessibility for small businesses.
- Policies to open federal land for housing could increase affordability.
- Repealing the ACA and proposed Medicaid cuts could affect coverage for low-income households.
- Universal tariffs on imports may protect U.S. industries but could increase consumer prices.
Taxes
Trump’s tax reform agenda was a cornerstone of his campaign.
- Trump money strategy aims to make the individual and estate tax cuts introduced in the 2017 TCJA permanent, which are set to expire in 2025. This move is projected to add approximately $4.6 trillion to the federal deficit over the next decade.
- He also plans to lower the corporate income tax rate from the current 21% to potentially 20% to stimulate domestic investment. Analysts are not confident that the 1% reduction is significant enough to drive domestic investment.
- He suggests exempting certain types of income from taxation, including tips and Social Security benefits.
- He proposed removing the current $10,000 cap on State and Local Tax (SALT) deductions, which could provide tax relief, particularly in high-tax states.
- He plans to impose a universal baseline tariff on all imports, with higher rates on goods from countries like China. This move is intended to protect domestic industries but could lead to increased consumer prices and potential trade conflicts.
Loans
One of Trump’s key economic pledges is fostering an environment that encourages growth through deregulation. While his presidency might not directly control interest rates, there are ways that his policies might affect borrowing costs:
- Unlike Biden, Trump is unlikely to support student loan forgiveness and broad loan cancellation. During his first term, Trump attempted to eliminate Public Service Loan Forgiveness (PSLF), but wasn’t successful. As the Republicans plan to take control of Congress, we’ll see if he brings up this initiative again.
- In addition, Trump has expressed support for expanding access to small business loans as a way to stimulate economic growth. If this approach continues, entrepreneurs could benefit from increased loan availability, though this may also lead to greater scrutiny of borrower qualifications to manage risks for lenders.
- Trump has previously criticized the Federal Reserve for its monetary policies. If his administration pushes for deregulation and aggressive growth policies, inflation could rise, prompting the Fed to increase interest rates. This would make borrowing more expensive for personal loans, credit cards, and mortgages.
Housing
President-elect Trump’s housing policies are tied to his views on illegal immigration. While he hasn’t been very comprehensive about his housing policies, this is what experts predict his proposals could lead to:
- Trump’s proposed mass deportation program targets millions of unauthorized immigrants, which he believes will reduce housing demand and lower costs. However, experts warn that such actions could negatively impact the construction industry, as undocumented immigrants make up a substantial portion of its workforce. A reduced workforce could lead to higher construction costs, decreased housing supply, and, therefore, decreased affordability.
- Trump’s administration intends to open portions of federal land for large-scale housing projects, aiming to increase housing supply and reduce costs. However, the effectiveness of this measure may be limited, as much of the federal land is not located near areas with high housing demand.
- He plans to support first-time homebuyers through tax incentives, such as mortgage interest and insurance deductions or tax credits. While specific details are limited, these measures aim to make homeownership more accessible.
Healthcare
And finally, Trump’s healthcare agenda indicates potential significant shifts in U.S. healthcare policy. Here’s how key proposals could influence your finances:
- Trump intends to repeal and replace the Affordable Care Act (ACA), commonly known as Obamacare. This shift could affect millions of Americans’ health insurance coverage.
- To address federal budget concerns, Trump may again propose cuts to Medicaid, potentially through spending caps or block grants to states. Such measures could impact healthcare access for low-income individuals and families.
- Discussions have emerged about modifying entitlement programs like Medicare and Social Security, focusing on reducing waste and ensuring long-term sustainability. However, specific policy directions remain unclear.
Donald Trump’s campaign promises bold changes with potential shifts in taxes, loans, housing, and healthcare.