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How To Financially Plan for the New Year Under the New Trump Presidency
G. Brian Davis
5 min read
Allison Robbert / Pool via CNP / SplashNews.com / Allison Robbert / Pool via CNP / SplashNews.com
In addition to all the usual year-end tax moves and other financial tweaks, many Americans are also looking ahead to how a new presidential administration under President-elect Donald Trump will impact their wallets.
It nearly always makes sense to contribute to your retirement accounts. But investors see extra reasons to max out contributions this year.
“President Trump campaigned on extending the tax cuts from his 2017 Tax Cuts and Jobs Act, which are set to expire at the end of 2025,” said Paul W. Carlson, managing partner and finance expert with Law Firm Velocity.
And with Republicans controlling both houses of Congress, that seems like a foregone conclusion.
In fact, Trump campaigned on lowering tax rates even further. Taxpayers could easily pay less in taxes in 2025 — making the tax write-off for 2024 contributions more valuable this year than next.
“I’d suggest maxing out your retirement accounts like IRAs or 401(k) [plans] now. Do it while you can still take advantage of those pre-tax contributions,” Carlson said.
Invest In Domestic Manufacturing and Energy — With Caveats
Who benefits from import tariffs?
Domestic manufacturers.
But not just any domestic manufacturers. Because other countries are likely to start charging retaliatory tariffs, Trump’s proposed tariffs would most benefit companies who both build and sell their products primarily within the U.S.
“If he goes full steam ahead with tariffs on imports, companies that rely heavily on overseas materials might struggle,” Carlson explained. “So, if you have investments in those areas, you’ll want to reallocate your portfolio.”
Trump’s proposed deregulation also stands to boost domestic companies, Carlson said. “You want to look at stocks in sectors that are poised to benefit from these changes, like energy, banking and manufacturing.”
Watch for a Dip in Precious Metals
The price of gold has skyrocketed nearly 40% over the past 12 months, hitting an all-time high in October. That booming growth may not last.
Business and entrepreneurship expert Brenda Christensen sees reduced regulation, business investment incentives and currency markets all pointing toward lower precious metal prices. “Anticipating a reduction in inflation and a stronger dollar by the end of next year, gold, silver and other precious metals will see a dip,” she said.
Sellers may look at exiting now, while bullish investors can consider buying the dip.
Explore Passive Real Estate Investments
One less-discussed tax change from the Tax Cuts and Jobs Act is bonus depreciation, which allowed some real estate investors and businesses to deduct more long-term depreciation in the first year of ownership. It spurred massive investments in the commercial real estate sector.
However, it has been gradually phasing out since 2022, and is scheduled to sunset entirely at the end of 2027. The near-certain extension of the TCJA also applies to bonus depreciation.
That makes the tax benefits for passive real estate investments particularly attractive. Investors in real estate syndications or joint venture partnerships can take huge tax write-offs, even as they collect cash flow on those investments. Consider joining a passive real estate investment club to start with smaller amounts.
Wait Until 2025 To Make Large Capital Expenditures
Accountant Gary Massey also pointed out the business implications of 100% bonus depreciation. “Renewed bonus depreciation would allow for the write-off of fixed assets in the year they are acquired.
“I am telling my small business clients to consider waiting until 2025 for purchases of expensive business assets like cars, trucks and computer systems. The deductions will be much more powerful if full bonus depreciation is back on the books.”
Keep an Eye on Inflation
Importers and retailers don’t just swallow the cost of tariffs. They pass them on to consumers in the form of higher prices.
Read: inflation.
Tariffs aside, many of Trump’s economic policies are designed to stimulate the economy. Tax cuts and reduced regulation both aim to juice the economy.
But what happens when an economy gets overstimulated, like happened in 2021? Inflation.
Sure enough, MarketWatch reported that derivative traders already anticipate higher inflation under the Trump presidency and are pricing in fewer interest rate cuts than the Federal Reserve has indicated.
Don’t Count on Lower Mortgage Rates
Likewise, if inflation remains stubbornly high, so will interest rates, bond yields and mortgage rates.
Many prospective homebuyers and real estate investors alike have assumed that mortgage rates will plummet in 2025. That may yet happen — but don’t be too certain.
Stock Up on Imports Now
Love French wines?
Consider buying what you want now, rather than waiting for tariffs to drive import prices higher. In particular, look at any products with a supply chain through China. That includes many consumer electronics, clothes and apparel items like shoes.
Trump has proposed 60% tariffs on Chinese imports and 10%-20% tariffs on imports from all other countries. If you can afford to pre-purchase something you know you’ll need in 2025, weigh the pros and cons of buying yourself an early holiday present.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
