() – President-elect Donald Trump promised Americans that he would lower consumer prices, make health care more affordable and protect Social Security. Now you must comply.
Concerns about inflation and the cost of living were key to Trump’s victory in the US presidential election. According to exit polls, 68% of voters said the economy was bad or at least It wasn’t good.
Much of the president’s ability to impact economic policy depends on congressional approval. However, when Trump takes office on January 20, he will have to keep his promises.
Here are seven ways the future Trump administration could affect your personal finances.
On the campaign trail, Trump suggested expanding the child tax credit, which provides financial assistance to parents in the form of tax breaks. The political platform linked on its website mentions the expansion of the child tax credit, but does not include further details.
During Trump’s first term, the Tax Cuts and Jobs Act of 2017 temporarily expanded the child tax credit from $1,000 to $2,000. That credit is set to expire at the end of 2025, but with congressional approval, Trump could extend the 2017 tax cuts or introduce a similar new policy.
Vice President-elect JD Vance has suggested expanding the child tax credit to $5,000. Trump has not commented on that proposal.
Maria Castillo Dominguez, a certified financial planner and founder of Valoria Wealth Management, told that extending credit is “vital” for many households, particularly those with young children, to manage child care costs.
Karoline Leavitt, spokesperson for the Trump-Vance transition, said in a statement that Trump will deliver on his campaign promises: “The American people re-elected President Trump by a resounding margin, giving him a mandate to implement the promises he made in the campaign.” Leavitt said. “He will comply,” he added.
The Trump administration is expected to focus on extending tax cuts introduced by the Tax Cuts and Jobs Act that are scheduled to expire in 2025. The move will require approval from Congress.
Extending Trump’s 2017 tax cuts would reduce taxes by an average of $2,000 in 2026, according to an analysis by the Urban-Brookings Tax Policy Center. However, almost half of the tax relief benefits would go to the top 5% of households earning more than $450,000.
For example, extending the tax cuts would save the top 1% of households about $70,000, or 3.2% of their income, according to the Tax Policy Center. By comparison, the tax cuts would save middle-income families about $1,000, or 1.3% of their income.
On the campaign trail, Trump touted ending double taxation on U.S. citizens living abroad, but he hasn’t mentioned the issue much since. Additionally, he hasn’t elaborated on his promise to make auto loan interest tax deductible.
Trump has suggested eliminating the federal income tax entirely in favor of tariff revenue. Alan Auerbach, an economics professor at UC Berkeley, told that the proposal doesn’t make financial sense. Tariff revenue is not enough to replace federal income tax revenue, he said. “The numbers don’t work for this.”
Trump promised “not to cut a penny” from Social Security, according to his political platform.
But he has proposed eliminating federal taxes on Social Security, tips and overtime pay. Tax revenue is used to fund federal aid programs such as Social Security.
Eliminating taxes would provide short-term relief, but would deplete funds for Social Security, according to the Tax Policy Center, leading to reduced benefits for workers.
Households earning $32,000 or less would not benefit from the federal tax cut because most of their Social Security income is not taxed, according to the Tax Policy Center.
Under Trump’s proposal, Social Security funding reserves would be depleted by 2031, according to the Committee for a Responsible Federal Budget. Additionally, there would be a 33% decrease in benefits for enrollees by 2035.
Key aspects of the Biden administration’s plan for student loan debt forgiveness are at stake, meaning the Trump administration could be decisive for millions of Americans waiting to have their debt canceled.
Attempts to forgive student loan debt, like those made by the Biden administration, will likely be scrapped under the Trump administration, according to Berkeley’s Auerbach.
Starting in August, some of President Joe Biden’s efforts to relieve student loan debt were blocked by a Supreme Court ruling.
“Republicans have been challenging those things in court, largely successfully, and I’m sure the sentiment in the Trump administration will be similar to that,” Auerbach said. “They’re really not interested in providing student loan relief.”
Trump’s political platform does not mention student loan debt. In his first term, he failed to end the Public Service Loan Forgiveness program.
Concerns about inflation helped send Trump back to the White House. However, with his proposed policies, inflation could return with a vengeance.
Inflation rose to 2.6% in October, its first increase in six months, according to the Consumer Price Index. The increase was in line with expectations, but was also a sign that the inflation beast is not completely tamed.
Trump’s proposals for 10% to 20% tariffs on imports would lead to an increase in everyday consumer prices, according to a report from the National Retail Federation. For example, $90 sneakers could cost between $106 and $116 with Trump’s proposed tariffs.
Additionally, Trump’s proposal for mass deportations could increase food prices. Auerbach noted that undocumented immigrants often work in agriculture or food processing, which portends a labor shortage if they are deported.
Auerbach told that the president-elect’s plans for mass tariffs and deportations could have the most significant impact on personal finances.
“If those things actually go into effect as proposed, there will be huge increases in the cost of living,” he said.
On the campaign trail, Trump went back and forth on his approach to changing the Affordable Care Act (ACA). He has said he has “concepts of a plan” for health care.
The Trump administration wants to “promote choice and competition” and make health care more affordable, according to its policy platform. However, it doesn’t provide any further details on how it will do that.
Americans enrolled in the ACA will likely see increases in health care costs after a key pandemic tax credit expires at the end of 2025.
As part of the American Rescue Plan Act of 2021, enhanced premium tax credits were introduced to lower out-of-pocket costs for eligible ACA enrollees. These tax credits were extended through 2025 as part of the Inflation Reduction Act of 2022.
A Republican-led Congress is likely to allow the enhanced personal tax credits to expire, according to KFF, a nonprofit health policy group. The credits save enrollees about $700 a year, according to KFF, and if they expire, about 19.7 million Americans will see increases in health care expenses.
“Future policy proposals will likely increase people’s costs for health coverage, roll back protections for people with preexisting conditions, and increase the number of people without coverage,” said Sarah Lueck, vice president of the Center on Budget and Health Priorities. Politics, a group of experts.
Regarding Medicare, Trump will not “cut a penny” from the program, according to his political platform.
“I think, at least in the short term, we won’t see major cuts in Medicare benefits,” Auerbach said, noting that Trump recognizes it is a popular program.
Trump’s political platform says his administration will promote homeownership “through tax incentives and support for first-time homebuyers.” It also mentions opening “limited portions” of federal government land for “new housing construction.” Trump has not elaborated on the plan beyond that in his platform.
The Trump administration will likely reduce bureaucracy to encourage business and real estate development. Housing costs are often impacted more by local regulations than by national policies, said Berkeley’s Auerbach.
Trump’s plan for mass deportations could reduce the workforce in the construction sector, putting pressure on an already tight supply of housing and, in turn, pushing up prices, Auerbach said.
As for mortgages, more affordable rates could come from the Federal Reserve’s decisions about where to set interest rates, Auerbach said. The Fed’s benchmark interest rate sets the cost of borrowing between banks and influences the interest rates consumers pay on loans, credit cards and mortgages.
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