In the wee hours of November 6 when the U.S. presidential race was called for Donald Trump, 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.”
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.”