New Year, New Presidency: How Might The Trump Administration Affect Your Finances?
It’s not uncommon to want to tighten your purse a little when a new president takes office. With new policies, many economic and financial changes could be ahead. There’s been a lot of speculation about how the economy will fare under President-elect Donald Trump, but he’s been pretty vocal up front about the things he wants to achieve.
Trump has stated that he wants to cut taxes by $6.2 trillion over the next 10 years by restructuring the seven current tax brackets to just three. This could result in many people falling into a lower bracket and paying a smaller percentage in taxes. He also wants to increase the standard deduction (the amount you can subtract from your income) considerably, so you would only pay taxes on the balance that was left.
But he intends to achieve all this by eliminating the personal exemption from the tax code, and it remains to be seen if the other changes will compensate for this for all taxpayers across the board. He’s also said that he’ll eliminate the head of household filing status, a break that helps a lot of single parents.
Trump bluntly stated during his campaign that the Affordable Care Act (ACA) is a “disaster” and that he intends to “completely repeal” it, but he’ll need the cooperation of Congress to get rid of Obamacare, at least in one broad stroke. Unfortunately, a lot of people might become uninsured in the transition. If ACA subsidies are eliminated, the end result may well be that fewer people will be able to afford health insurance premiums — although presumably they would no longer have to pay a tax penalty because coverage is outside their financial range.
Trump has made no secret of his disdain for globalization and certain trade deals. It’s possible that some foreign goods may become more expensive in the U.S. if his policies on foreign trade remain in line with his campaign position. But this could ultimately have a positive result on the economy overall if it urges people to buy American products instead.
The Stock Market
Futures began sinking on the stock exchange as it became clear on election night that Donald Trump was probably going to upset Hillary Clinton. But then futures headed back up in the morning, and the Dow was up 257 points by the end of the day.
Hans “John” Scheil, CFP with Cardinal Advisors of Carey, North Carolina, anticipates that the first 100 days of Trump's presidency will see the same market volatility that’s been experienced since the election. “The general direction of the market is bullish, providing that the Trump administration is successful in working with Congress to pass a tax bill and overhaul healthcare,” Scheil says. “The president has less of an effect on the markets than corporate earnings, employment and interest rates.”
In other words, it’s always a wait-and-see game when a new president is elected, so you might want to put off significant financial moves of any sort for the first 100 days.