What Will Trump’s Second Term Mean for Your Money? Professional Weight Scales

The economy was a major concern of voters during the presidential election. According to a September Pew Research poll, the economy overtakes health care, foreign policy and crime as the top priority.

We all wonder how President-elect Donald Trump’s policies will affect our finances over the next four years. Not all of Trump’s policy details have been spelled out, and many of his proposals will require congressional approval to take effect. While it’s impossible to know all the answers, here’s what experts say we can expect in Trump’s next term, which begins in Jan. 20, 2025.

Costs and mass layoffs can drive up prices

The president-elect has been talking about two plans: higher tariffs on imports and mass deportation of illegal immigrants. If the administration does either, prices could rise in the US.

The tariffs, which raise the cost of imported products and imported goods used in American industry, act as an excise tax, according to Usha Haley, a professor at Wichita State University and an expert on trade with China.

“Trump’s proposed tariffs of 60% on all imports from China and 20% on imports will increase costs to end users exponentially,” Haley said. While companies may benefit from reduced profit margins, importers often pass on part of these tax costs in the form of higher prices to consumers.

Attempts at mass deportations could increase prices because of the large impact on workers, according to David Anderson, Blazer professor of economics and business at Center College in Danville, Kentucky.

“Immigrants are important in industries including agriculture, health, construction, food and transportation,” said Anderson. “Less workers in those and other areas could put upward pressure on costs and labor costs.”

Inflation, the annual rate of change in the price of consumer goods and services, rose to record levels after the pandemic. Following the Federal Reserve’s post-pandemic rate hike campaign that began in 2021, inflation has been slowly returning to the central bank’s annual target of 2%. Prices, however, remain high after years of rate hikes.

The Federal Reserve was preparing to move forward with further reductions in the federal funds rate through 2025, which would lower borrowing costs. But if prices and mass layoffs fuel inflation, interest rates will likely remain high for a short time.

Some tax cuts will be extended, others could disappear

Most experts expect Trump to extend and possibly extend the Tax Cuts and Jobs Act of 2017, which is scheduled to expire in 2025.

The TCJA was passed during the first Trump administration in January 2018. Some of the notable tax breaks that are still in effect include:

• Lower individual income tax brackets. If you pay income taxes, you will pay one of seven taxes, depending on your tax bracket. The TCJA reduced five of the seven tax rates.

• High deductions. Most taxpayers claim the standard deduction. The TCJA almost doubles the amount you get.

• Child Tax Credit Increase. You can earn up to $2,000 with CTC, up from $1,000 previously.

Although the TCJA lowers taxes on most households, most of the benefits of extending this tax law will go to those earning $450,000 or more, according to a recent report by the Tax Policy Center. About 75% of households will see some form of tax cut, but 45% of the insurance tax break will benefit high earners, the report found.

However, the incoming administration does not plan to extend all tax breaks. Some tax breaks, such as the EV tax credit, which can reduce your taxes by $7,500 if you buy an eligible electric vehicle, will likely be eliminated.

Other tax plans, such as Trump’s proposed proposal to give “big tax cuts to workers” and eliminate the tax on tips, are unclear.

Social Security benefits may be at risk

Trump also proposed eliminating taxes on Social Security benefits. While this may provide temporary relief to those collecting SSI benefits, it would also deplete Social Security funds, which could hurt workers down the road, according to the Tax Policy Center.

For anyone approaching retirement or planning ahead, experts don’t recommend banking solely on Social Security to fund your future. Instead, put some of your paycheck each month into a tax-advantaged retirement plan, such as a 401(k) or Individual Retirement Account. New retirement rules from the SECURE 2.0 Act in 2025 may make it easier for you to save for your future.

Student loan forgiveness and other benefits could disappear

Based on Trump’s previous tenure and Republicans’ vocal opposition to student loan relief, experts have predicted the incoming administration’s plans for student loan relief. With Republican state leaders leading efforts to block forgiveness in the courts, it is unlikely that things will move forward with the Biden administration’s Preservation Plan or the broader “Plan B” effort to forgive student loans.

Under Trump, the SAVE Plan is in jeopardy, said Elaine Rubin, a student loan and policy expert with Edvisor and a member of CNET’s expert review board.

“We don’t expect the Trump administration to pursue a legal battle to maintain SAVE or authorize a broad amnesty,” Rubin said. If SAVE is canceled before Jan. 20, Rubin doesn’t think the Biden administration would have enough time to successfully challenge the decision.

Rubin recommends that borrowers pay close attention to their loan repayment status as court cases continue, especially if they are not resolved before Trump takes office. He also suggests reviewing other income-driven payment plans now, in case SAVE is repealed.

Project 2025, a right-wing, conservative plan, proposes ending popular forgiveness programs, abolishing the Department of Education and privatizing student loans. Although Trump denied having anything to do with the proposal during the campaign, he has appointed some of those involved in the plan to high-ranking positions in his administration. Trump also promised to close the Department of Education on the campaign trail, a move that would require Congressional support.

Many parts of Project 2025’s plan for public education, including eliminating the Department of Education, are highly speculative, according to Rubin. “It’s unclear whether he’ll have the votes he needs to make any of those changes,” Rubin said.

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