How Trump’s Policies Could Impact Your Wallet: Tax Cuts, Social Security, and Inflation

President-elect Donald Trump made promises during his campaign, including lowering consumer prices, making health care affordable, and protecting Social Security. However, he will need Congress’s approval to implement many of these plans after his inauguration on January 20.

Here are some potential impacts of a Trump administration on personal finances:

1. Child Tax Credit: Trump suggested expanding the child tax credit, which offers tax breaks to parents. During his first term, the credit increased from $1,000 to $2,000 but is set to expire in 2025. Trump could seek to extend this policy or introduce a new one with Congress’s support. Vice President-elect JD Vance proposed increasing the credit to $5,000, but Trump has not publicly commented on this idea.

2. Tax Cuts: Trump’s administration is likely to push for extending tax cuts from the 2017 Tax Cuts and Jobs Act, which are also set to expire in 2025. This could save households an average of $2,000 in taxes in 2026, with significant benefits going to high-income earners. Nearly half of the benefits would go to the top 5% of households.

3. Social Security: Trump promised no cuts to Social Security. However, he proposed eliminating federal taxes on Social Security payments. This could provide immediate financial relief but might reduce future benefits due to decreased revenue for the program. According to estimates, this change could lead the Social Security fund to run dry by 2031 and result in a significant decrease in benefits by 2035.

4. Student Loan Debt: Trump’s position on student loan forgiveness initiatives remains unclear. Many aspects of the Biden administration’s loan relief efforts could be reversed under Trump. His policy platform does not address student loan debt directly.

5. Prices and Inflation: Concerns over inflation were significant during Trump’s campaign. Proposed tariffs of 10% to 20% on imports could raise consumer prices for goods like athletic shoes. His immigration policies could also affect labor supply in food production, potentially increasing food prices.

6. Health Care: Trump has yet to provide specifics on plans to change the Affordable Care Act. His administration aims to increase competition and reduce costs. However, people enrolled in the ACA might face higher costs if pandemic-related tax credits expire in 2025. This could lead to millions seeing increased health care expenses.

7. Housing Market: Trump’s platform proposes promoting homeownership through tax incentives. However, his plan for mass deportations could limit the labor force in construction, straining housing supply and causing prices to rise.

Overall, the policies proposed by Trump could have wide-ranging effects on personal finances, impacting everything from taxes to health care and housing costs.