CNN
—
President-elect Donald Trump has promised Americans he will lower consumer prices, make health care more affordable and protect Social Security. Now he has to follow through.
Concerns about inflation and the cost of living were central to Mr Trump’s victory in the US presidential election. According to a CNN exit poll, 68% of voters said the economy was bad or not good.
Much of the president’s ability to influence economic policy is dependent on Congressional approval. Nevertheless, when Trump takes office on January 20th, he will be focused on fulfilling his campaign promises.
Here are seven ways the Trump administration will affect your personal finances.
On the campaign trail, Trump proposed expanding the child tax credit, which provides financial support to parents in the form of tax cuts. of policy platform A link on his website mentions expanding the child tax credit but does not include any further details.
During President Trump’s first term, the Tax Cuts and Jobs Act of 2017 temporarily expanded the child tax credit from $1,000 to $2,000. The credit is set to expire at the end of 2025, but President Trump could extend the 2017 tax cuts or introduce new policies if approved by Congress.
Vice President-elect J.D. Vance proposed expanding the child tax credit to $5,000. Trump has not commented on the proposal.
Maria Castillo Dominguez, a certified financial planner and founder of Valoria Wealth Management, told CNN that for many households, especially those with young children, loan extensions are “essential” to manage child care costs. ”
Caroline Levitt, a spokeswoman for Trump and Vance’s transition, said in a statement that Trump will fulfill his campaign promises.
“The American people re-elected President Trump by a wide margin and gave him a mandate to deliver on the promises he made during his campaign,” Levitt said. “He’ll deliver.”
The Trump administration is expected to focus on extending tax cuts introduced by the Tax Cuts and Jobs Act that expire in 2025, a measure that would require approval from Congress.
Extending President Trump’s 2017 tax cuts would result in an average tax cut of $2,000 in 2026, according to the paper’s analysis. Urban-Brooking Tax Policy Center. However, almost half of the tax relief benefits will go to the top 5% of households with annual incomes of $450,000 or more.
For example, extending the tax cut 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 cut would save middle-income households about $1,000, or 1.3% of their income.
While on the campaign trail, Trump touted his desire to end double taxation for Americans living abroad, but he has not mentioned the topic much since then. It also did not elaborate on its promise to make interest on auto loans tax deductible.
President Trump has proposed eliminating the federal income tax entirely in favor of customs revenue. Alan Auerbach, an economics professor at the University of California, Berkeley, told CNN that the proposal doesn’t make economic sense. He said revenue from tariffs is not enough to replace revenue from federal income taxes. “Numbers are useless in this regard.”
President Trump promised not to do that. His policy platform calls for cutting Social Security “by a penny.”
But he proposes eliminating federal taxes on Social Security, tips and overtime pay. Tax revenue is used to fund federal aid programs such as Social Security.
Abolishing the tax would provide short-term relief, but Funding for Social Security is running out, according to Tax Policy Centerleading to reductions in worker benefits.
According to the Tax Policy Center, households with incomes of $32,000 or less miss out on federal tax breaks because most of their Social Security income is not taxed.
Under President Trump’s proposal, the reserves for Social Security would be depleted by 2031. Committee for a Responsible Federal Budget. Furthermore, by 2035, benefits to members will be reduced by 33%.
A key aspect of the Biden administration’s student loan debt forgiveness plan is in jeopardy, meaning the Trump administration could affect the outcome for millions of Americans seeking debt relief.
Berkeley’s Auerbach said the Biden administration’s effort to forgive student loan debt would likely be scrapped under the Trump administration.
As of August, some of President Joe Biden’s efforts to alleviate student loan debt remained blocked by a Supreme Court ruling.
“Republicans have challenged these things in court and have been mostly successful, and I think the Trump administration’s sentiment will be similar,” Auerbach said. “They’re not really interested in student loan relief.”
President Trump’s policy platform does not mention student loan debt. In his first term, he failed to end the Public Service Loan Forgiveness Program.
prices and inflation
Concerns about inflation helped bring Trump back to the White House. But under his proposed policies, inflation could flare up again.
Inflation rose to 2.6% in October, the first increase in six months, according to the Consumer Price Index. The rise was expected, but it was also a sign that the beast of inflation has not yet been fully tamed.
One report says President Trump’s proposed 10% to 20% tariffs on imported goods would lead to higher everyday consumer prices. report By the National Retail Federation. For example, a $90 pair of athletic shoes could cost between $106 and $116 under President Trump’s tariffs.
Additionally, President Trump’s mass deportation plan could increase food prices. Auerbach noted that illegal immigrants often work in agriculture and food processing, and deportation could create a labor shortage.
Auerbach told CNN that the president-elect’s plans for tariffs and mass deportations could have the biggest impact on people’s finances.
“If these things actually go into effect as proposed, the cost of living will rise significantly,” he said.
During the campaign, Trump went back and forth on his approach to changing the Affordable Care Act. He said he had a “planning vision” for health care.
According to its policy platform, the Trump administration wants to “promote choice and competition” and make health care more affordable. However, further details have not been disclosed.
Americans enrolled in the ACA marketplace are likely to see increased health care costs when important pandemic tax credits expire at the end of 2025.
As part of the American Rescue Plan Act of 2021, an enhanced premium tax credit was introduced to reduce out-of-pocket costs for eligible ACA enrollees. These tax credits were expanded through 2025 as part of the Inflation Control Act of 2022.
The Republican-led Congress is likely to let the enhanced personal tax credit expire, the paper said. KFFa nonprofit health policy group. The credit saves enrollees about $700 a year, according to KFF, and when it expires, about 19.7 million Americans will face skyrocketing medical costs.
“Future policy proposals could raise health insurance premiums for Americans, roll back protections for people with pre-existing conditions, and increase the number of people who are uninsured,” said Sarah Lueck, deputy director of the Center on Budget and Policy Priorities. “It’s expensive.” think tank.
When it comes to Medicare, President Trump’s platform says he will not cut “a penny” from the program.
“I don’t think Medicare benefits will be significantly cut, at least in the short term,” Auerbach said, noting that President Trump also recognizes that Medicare benefits are a popular program. .
President Trump’s policy platform says his administration will promote homeownership “through tax incentives and assistance for first-time buyers.” It also talks about opening up a “limited portion” of federally owned land for “new housing construction.” Trump has not elaborated on his platform.
The Trump administration is likely to abolish red tape to encourage business and real estate development. Housing costs are often most affected by local regulations. instead of Berkeley’s Auerbach said it’s national policy.
Auerbach said President Trump’s mass deportation plan could shrink the construction sector’s workforce, strain an already tight housing supply and cause price hikes.
When it comes to mortgages, Auerbach said the Federal Reserve’s decisions about where to set interest rates could lead to more affordable rates. The Fed’s benchmark rate sets the cost of borrowing among banks and affects the interest rates consumers pay on loans, credit cards and mortgages.
