What a Trump Win Could Mean for Middle-Class Taxes

Potential Market Impact

A Trump presidency could impact the market and middle-class taxpayers, influencing financial strategies and investment decisions.

Unpredictability of Tax Policies

Predicting exact tax policies is challenging due to political promises and required Congressional approval.

Federal Payroll Tax Cuts

Trump may propose cuts to federal payroll taxes, reducing the tax burden on workers but affecting Social Security and Medicare funding.

Previous Payroll Tax Deferral

During the pandemic, Trump temporarily deferred payroll taxes, hinting at potential permanent cuts in his 2024 campaign.

Impact on Social Security &Medicare

Cuts to payroll taxes could lower taxes but raise concerns about the sustainability of Social Security and Medicare.

Extension of 2017 Tax Cuts

Trump aims to extend the 2017 Tax Cuts and Jobs Act (TCJA), maintaining benefits for individuals and businesses beyond 2025.

Standard Deduction Levels

Extending the TCJA means the standard deduction would remain elevated, benefiting the middle class by reducing taxable income.

Tariff-Based Tax Proposal

Trump has suggested replacing personal income taxes with increased tariffs, potentially altering the tax landscape.

Exemption of Tip Income

Another proposal includes exempting tip income from taxation, providing relief for workers in tip-dependent industries.

Republican Stance on Tax Cuts

Republicans generally support tax cuts but may oppose deficit-increasing measures, leading to potential intra-party conflicts.

Impact of Pass-Through Entity Tax Cuts

The 2017 TCJA included a 20% deduction for pass-through entities, costing $700 billion and benefiting top earners significantly.