News
Trump's win means low taxes, stock market gains, and economic growth – for now
In the wee hours of November 6 when the U.S. presidential race was called for Donald T r ump , many Americans made a prediction, some advisers say: A Trump victory means lower taxes are here to stay .
For the past year, many Americans were bracing for the expiration of the 2017 Tax Cuts and Jobs Act (TCJA), also known as the Trump tax cuts. TCJA was the largest overhaul of the tax code in 30 years. It included widespread tax reductions for businesses and individuals. Many of the benefits for individuals, including lower tax rates for nearly all Americans, expire at the end of 2025.
Now that Trump’s returning to the White House with a majority in both congressional chambers , advisers say TCJA’s likely to get extended.
“There was a little bit of relief with our clients, especially those who didn’t necessarily want him to win or vote for him,” said Daniel Milan, managing partner at Cornerstone Financial Services in Southfield, Michigan. “It’s almost to make themselves feel better about (Vice President Kamala Harris’) loss. It’s self-soothing, in a sense.”
What do Americans gain if Trump tax cuts are extended?
Potentially stronger investment portfolios and economy, at least in the short term: Americans have already seen their 401(k) and other stock market investments soar, partly on expectations Trump will keep corporate tax rates low and possibly, even lower them further, some advisers said. The blue-chip Dow and broad S&P 500 indexes surged to record highs the day after the election and have remained strong .
“Companies that delayed investment spending on election/regulatory uncertainty may now be prepared to start putting money to work,” wrote chief international economist James Knightley and Dutch Bank ING in a report.
That should bode well for corporate profits and economic growth, economists said.
Scott Anderson, chief U.S. economist at BMO Economics bumped up his 2025 economic growth forecast to about 2.2% from 1.9%. “The Trump victory is likely to at least temporarily bolster consumer and business confidence as well as stock market performance,” he said.
Lower tax rates . One of the most significant changes for most Americans included lower income tax rates . The top rate fell from 39.6% to 37%, the 33% bracket dropped to 32%, the 28% bracket dipped to 24%, the 25% bracket slid to 22%, and the 15% bracket fell to 12%. The lowest bracket remained at 10%, and the 35% tax bracket was unchanged. If the income tax cuts aren't extended, the affected brackets will revert to pre-TCJA levels.
With Trump’s win, “there’s renewed confidence these will be extended or become permanent tax cuts,” Milan said. “This is good news for our finances.”
With income tax rates expected to stay low, Americans don’t have to feel rushed to do Roth IRA conversions , said Jim Czerniak, chief investment officer at Ambassador Wealth Management in Warrenville, Illinois.
A Roth conversion moves a traditional pre-tax IRA, SEP IRA , SIMPLE IRA , or 401(k) into a Roth IRA . People pay income tax on the converted amount but can take tax-free withdrawals later. Roth IRAs also aren’t subject to required minimum distributions.
Estate planning : High net worth individuals also don’t have to rush to give away their assets to protect them from taxes, advisers said. The TCJA doubled the federal lifetime gift tax exemption amount and annually indexed for inflation. In 2024, each individual has a combined federal estate and gift tax exemption of $13.61 million dollars. At the end of 2025, that exemption would have halved again.
“That was a top priority for clients, but the election basically made those conversations a moot point,” Milan said.
Completing the picture: Who has Trump picked for his Cabinet so far? Marco Rubio, Matt Gaetz among latest nominees
Are there any downsides for consumers to an extended TCJA?
The biggest downside is adding to the ballooning budget deficit , but that pain may not be immediately apparent, economists and advisers said.
The nonpartisan, non-profit organization Committee for a Responsible Federal Budget estimates full extension of the Trump tax cuts could increase the federal deficit by $4 trillion to $5 trillion over ten years .
A rapidly increasing deficit could boost inflation and long-term interest rates , economists said. That could mean the costs of groceries, rent and services spike again, and that it becomes more expensive for businesses and individuals to borrow.
“Theoretically, the Fed may need to put its easing cycle on hold prematurely, or even reverse it, if inflation gets out of hand,” Anderson said. “But again, this is more of a 2026 story than a 2025 one.”
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
This article originally appeared on USA TODAY: Trump, Republican victories ease Americans' looming tax hike fears