Another Donald Trump presidency could happen, and your wallet could feel it. It is impossible to know exactly which financial policies will be put in place, but the overall effect may vary from currency to currency.
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“I think one of the biggest points that a person can use is the latest theory of the tax code at different levels,” said Joseph Boughan, CFP, financial planner and president of Parkmount Financial Partners. “The Tax Cuts and Jobs Act (TCJA) is scheduled to expire after 2025; and, depending on who chooses to be elected, the tax implications affect people’s financial planning.”
Taxes may be a big issue, but other financial strategies will also work. Here’s a look at what low-, middle- and high-income earners can expect from their finances if Trump is elected.
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Low Income
“Trump was eager to expand the Tax and Jobs Act, which raised the standard deduction and strengthened the child tax credit,” said Ben Engel, an investment adviser at Modesto Capital. “This measure would continue to help low-income earners by reducing their tax bill and giving them more tax credits to work with.”
In addition, he said paying for health care could become more difficult if Trump is elected.
“His push to roll back the Affordable Care Act (ACA) could make health care more expensive or unaffordable for those at the lower end of the income spectrum,” Engel said. “And let’s not forget potential cuts to welfare programs like SNAP and housing assistance, which could mean less support for low-income families.”
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Average Income
“For middle-income earners, the TCJA extension will likely keep the tax brackets and deductions as they are, meaning they won’t see a return to the higher tax rates from before TCJA,” Engel said. “Trump’s pro-business stance and deregulation efforts could be a boon for job growth and possibly lead to higher wages.”
While there may be financial cuts for the middle class, he said there may be losses.
“Changes in health care policy can result in higher premiums and out-of-pocket costs, especially if coverage for pre-existing conditions is reduced,” Engel said.
Middle-income retirees who rely heavily on income tax across a wide range of incomes would be better off if Republicans extend the TCJA, because of the high rate cuts, Boughan said.
“A lot of pensioners who are not very high net worth don’t have mortgages and other small debts,” he said. “At the same time, there is speculation that Democrats could extend this — and the TCJA’s portion of the child tax increase — if elected, but there has been little clarity on how this could happen. .”
High Income
“High-income workers have benefited the most from Trump’s policies, especially with lower taxes on high-income earners and capital gains,” Engel said. This trend can continue, saving a lot of tax money for the wealthy.
Additionally, potential changes to the estate tax system could benefit high net worth individuals.
“Any measures to reduce or eliminate the estate tax would allow more wealth to be transferred without Uncle Sam taking a cut,” Engel said. “The wave of deregulation has also been a breather for people who receive large amounts of money – especially business owners and investors – by encouraging economic growth and providing higher returns on investments.”
However, high-income people who live in coastal cities may realize net worth if the TCJA ends as planned, Boughan said.
“These people tend to pay higher state and local taxes (SALT) and may be less affected by the lapse – if they have large losses to declare, which including reducing the SALT amount would also be beneficial if the TCJA ends,” he said.
Apart from the tax law, he said there are other issues as well.
“Under a Republican administration, there may be changes to the health care subsidy programs and other health programs, which may affect low-income people,” he said. like that. “But this hasn’t changed much under the recent Republican administration, so there’s little chance of it changing this time around.”
However, Boughan said, some analysts have suggested that lower regulations and business taxes proposed by Republicans could help boost the broader economy.
“[This] affects the job market, inflation prospects and can help many middle- and high-income earners who rely on corporate stock market performance for their retirement plans, ” he said.
However, he said it is important to note that the overall effect of the system on the stock market is expected to be small.
“Over the long term, the data shows that the market has performed very well under both Democratic and Republican administrations,” he said.
Finally, Boughan said Republicans have talked about setting higher international tariffs, which has caused some economists to worry about inflation.
“[This] it affects people with the lowest income,” he said.
In the end, he said, it remains to be seen whether this policy is a serious expectation or just a way to discuss international trade. Only time will tell if Trump will be elected, if at all, and how his agenda will affect your financial situation.
Editor’s note on polling news: GOBankingRates is non-partisan and strives to accurately cover all aspects of the economy and produce balanced reports on politically charged financial stories. You can find more information on this topic at GOBankingRates.com.
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This article appeared on GOBankingRates.com: I’m a Financial Planner: How a Trump Presidency Could Affect Your Finances Based on Your Income.
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