As we edge closer to the 2024 election, many of us are wondering, What would another Trump presidency mean for our wallets? Trump’s promises might sound familiar—lower taxes, fewer regulations, and putting “America First.” But there’s more to the story, and it’s not as simple as a soundbite. In this post, we’ll break down exactly what a Trump win could mean for you and your money.
Tax Cuts and Jobs Act 2.0: What’s on the Table?
In 2017, the Tax Cuts and Jobs Act (TCJA) marked a huge shift in tax policy, dropping the corporate tax rate from 35% to 21% and reducing personal income tax rates across most brackets. Trump wants these tax cuts extended beyond 2025, benefiting high-income earners most but also providing some relief for middle- and low-income families:
- Low-income households: Average tax savings around $490 annually.
- Middle-income households: Average savings of $1,430 annually.
- High-income households (top 20%): Savings could reach around $11,420.
The TCJA also capped State and Local Tax (SALT) deductions at $10,000—a point of contention for residents in high-tax states like New York and California. Trump’s recent suggestion to remove this cap could disproportionately benefit wealthy households, potentially costing the government $600 billion over the next decade.
Capital Gains Tax: A Windfall for Investors
In another significant change, Trump has floated reducing the capital gains tax rate from 20% to 15%. For Wall Street investors and anyone with a real estate portfolio, this could mean massive tax savings. However, critics argue that it would widen the wealth gap, as middle-class Americans who rely more on wages wouldn’t see much benefit.
What to expect:
- The proposed capital gains cut would primarily benefit wealthier individuals with substantial investment portfolios.
- Critics warn that this policy could increase inequality, with little to no benefit for those without significant assets.
Service Industry Tax Relief: Tips and Overtime
Trump’s recent proposals suggest that service industry workers—including many in swing states—could see a break on tips and overtime pay. Making tips tax-free would allow workers to keep more of their earnings, though some economists worry it could become a loophole for tax-dodging if higher earners attempt to classify their income as “tips.”
Healthcare Costs: A Different Path Than Democrats
Trump has made clear his aim to repeal the Affordable Care Act (ACA) and replace it with private insurance options. Without the ACA’s protections, Americans with pre-existing conditions might face higher premiums and fewer coverage options. This sharp contrast to Democratic plans could mean more significant healthcare expenses for millions.
Trade Tariffs: “America First,” but at What Cost?
In his first term, Trump’s tariffs hit imports from China and other major trading partners hard. For 2024, he’s proposing even steeper tariffs—up to 10% on all imports and 60% on Chinese goods. While designed to bolster American manufacturing, these tariffs come with side effects:
- Increased costs for US consumers: The Tax Policy Center estimates a $1,800 reduction in after-tax income for average households due to higher prices on everyday goods.
- Possible price spikes on electronics, appliances, and other imported products.
While these tariffs are intended to support domestic industry, their real impact will likely hit consumers in their wallets.
National Debt and Interest Rates: A Growing Concern
Critics argue Trump’s focus on tax cuts and spending with little regard for the national debt poses a significant risk. Between 2017 and 2021, the federal deficit swelled by $7.8 trillion, and additional tax cuts could add another $2 trillion to the national debt over the next decade. Higher interest rates would make borrowing costlier, impacting mortgages, car loans, and other forms of credit.
Key concerns:
- The Committee for a Responsible Federal Budget projects Trump’s policies could add $7.5 trillion to the federal debt over the next decade.
- Growing debt may shake global market confidence, raising borrowing costs and interest rates for Americans.
Cryptocurrency: Embracing Digital Assets
After a previous skepticism about cryptocurrencies, Trump has pivoted, promising to reduce regulation, establish a crypto advisory council, and create a federal bitcoin reserve. Investors in digital assets could find a Trump administration more crypto-friendly, but the lack of clarity on policy specifics leaves many questions.
What Does All This Mean for the Average American?
Despite Trump’s pro-worker rhetoric, his policies have historically favoured high-income individuals and businesses. Middle-class families would likely see modest tax cuts, but the most substantial benefits would go to wealthy Americans and corporations. For those in lower income brackets, Trump’s policies offer limited financial relief but do include proposals like the tax exemption on tips.
Conclusion: Can Trump Deliver on Financial Promises?
Trump’s promises for 2024 focus on tax cuts, deregulation, and “America First” policies. But with a record-high deficit and a likely divided Congress, his ambitious financial plans may face resistance. Ultimately, his policies could mean short-term gains for wealthy Americans and businesses, but they may also bring higher costs for middle- and lower-income households. How these policies play out depends heavily on how Trump’s team navigates the challenges of fiscal stability and long-term economic health.
Learn More:
- Tax Cuts and Jobs Act Tax Policy Center
- State and Local Tax (SALT) deductions Committee for a Responsible Federal Budget
- Affordable Care Act HealthCare.gov
- Capital gains tax IRS
- Cryptocurrency SEC
