What Kind of Financial Changes Can I Expect This Year?

Q: The news is filled with predictions and expectations about the economy. It sort of feels like a guessing game, to be honest. What kind of financial changes can I really expect to see?

A: The news can be hard to follow these days. And while no one can predict the future, many proposed financial policies may impact individuals and businesses. Here’s an overview of what to expect and some practical steps you may need to take some time down the line.

Tax policies

• Tax Cuts and Jobs Act (TCJA) Expiring. The TCJA, enacted in 2017, introduced individual tax cuts that expire at the end of 2025. The incoming president has indicated plans to make these tax cuts permanent, which would maintain the current lower individual tax rates beyond 2025. He has also made plans for reducing the corporation tax to 20%, and potentially as low as 15%, for companies that manufacture in the U.S.
• Estate and gift tax exemptions. The TCJA also increased estate and gift tax exemptions, which are scheduled to revert to lower thresholds after 2025. The administration may seek to extend these higher exemptions, thus affecting estate planning strategies. If the higher exemptions go through, review your estate plan to ensure it still meets your needs.

Trade policies

• Universal import tariffs. There are proposals for implementing a universal baseline tariff on all U.S. imports to encourage domestic production and reduce reliance on foreign goods. But, this could also result in higher costs for imported products.

Economic policies

• Infrastructure investment. The incoming administration plans to invest in infrastructure projects, including developing “freedom cities” and enhancing national defense systems. These projects should create jobs and stimulate economic growth.
• Energy policies. A focus on expanding fossil fuel exploitation is anticipated, which will aim to achieve energy independence and lower energy costs for the U.S. This may influence energy markets and environmental policies.

Healthcare policies

• Affordable Care Act (ACA) revisions. The administration has expressed intentions to modify or replace parts of the ACA, which could affect healthcare coverage and costs for individuals and families. If the ACA is revised, confirm that your healthcare coverage is still sufficient.

Regulatory policies

• Deregulation efforts. There is talk of reducing regulations across various industries, which will decrease business costs and promote economic growth.

Financial markets

• Stock market focus. The administration may implement policies to bolster market performance. If you have investments, it’s important to monitor policy announcements that could influence market dynamics.
• Crypto winnings. The president suggested he may create a bitcoin strategic reserve similar to the U.S.’s strategic oil reserve, which sent bitcoin prices soaring to record highs.

Staying informed can help you navigate upcoming financial changes successfully.