I read up on hundreds of pages of tax proposals to attempt to answer these questions for myself after Trump won the 2024 presidency:

1. What income levels are paying less in taxes?

2. Are any income levels actually paying more in taxes?

3. What are the new tax policies in 2025?

4. What’s the actual dollar difference that we’re going to experience?

Watch the extended version HERE.

Tax Changes (Cuts)

Trump wants to make some big changes to the tax rules in 2025, so here’s what’s going on:

1. Getting Rid of the SALT Cap
   Right now, you can only deduct up to $10,000 of state and local taxes to lower your federal taxes. Trump wants to remove this limit. But most people don’t have that much in state and local taxes, and you’d have to use “itemized deductions” instead of the “standard deduction” (the easier and more profitable option most people use).

2. Bonus Depreciation
   Businesses can save money on taxes by writing off depreciation on things like equipment or tools they buy. Trump wants them to be able to write off everything all at once instead of spreading it out over the years. This helps businesses save faster.

3. Research and Development
   Normally, businesses have to spread out (amortize) the cost of research over five years. Trump wants them to be able to write off these costs upfront. This helps businesses get money back sooner.

4. Domestic Production Deduction
   Trump wants to lower taxes for companies that make things in the U.S., cutting their tax rate from 28.5% to 15%. This is great for businesses making stuff domestically.

5. New Tax Breaks
   No taxes on tips. No taxes on overtime pay. No taxes on Social Security benefits (money older people get when they retire).

6. Tax Deduction for Car Loans
   If you have a car loan, you could get a tax break. But this only works if you itemize deductions (not common for most people).

7. Family Caregiver Credit
   If you take care of a loved one, like an elderly parent, you might get a tax credit. This could really help caregivers.

In short:

• Businesses win big from bonus depreciation, research deductions, and lower corporate taxes.

• Higher-income people benefit most from getting rid of the SALT cap and itemized deductions.

• Older people or those with specific situations (like car loans or caregiving) might get some help too.

All of these tax cuts are great, but:

• Is it too good to be true?

• How will the government pay for all these tax cuts?

• If they’re collecting less tax money, will it hurt something else like public programs?

Tax Changes (Adds)

Trump wants to add taxes, called tariffs, on stuff coming into the U.S. from other countries. Here’s what he’s planning:

• 20% tariff on goods from all countries.

• 60% tariff on goods from China.

• 200% tariff on some cars, especially electric vehicles (EVs).

A tariff is a tax on imported goods. But it’s not the country (like Mexico or China) paying the tax — it’s the company importing the goods. And guess what? Those companies pass the extra cost on to you, the buyer.

For example:

• Most avocados are imported from Mexico. If there’s a 20% tariff, Walmart and Costco will pay the tax but then charge you 20% more to keep their profit.

• This happens with all imported items: cars, electronics, clothes, and groceries. Everything will cost more.

Tariffs hit low-income families the hardest because they spend a bigger chunk of their money on everyday goods.

• The bottom 20% of earners could lose 4% of their after-tax income because of higher prices.

• The top 1% lose less than 1% because they own and invest in companies that raise prices to protect profits.

If you pair Trump’s tax cuts with these tariffs:

• High-income people (like business owners) might still come out ahead because of their tax breaks.

• Low- and middle-income people are more likely to lose money because rising prices cancel out any tax savings.

In short, tariffs make imported goods more expensive, and the people with less money feel the impact the most.

Taking the upsides of the tax cuts on one hand and the downsides of the tariffs on the other:

• Who’s going to be a net benefiter?

• Who’s going to be a net loser from these two policies?

Tax Implications

There are two ways to look at how Trump’s policies affect people: income levels and specific groups/professions.

1. Income Levels

• Short-term: Everyone loses more from tariffs than they gain from tax cuts. Lowest incomes (bottom 20%) lose the most: 2.6% of after-tax income. Upper-middle incomes (80–90%) lose the least.

• Long-term: Most income groups see some benefit, but the bottom 40% still lose out. Lower incomes feel the impact of tariffs the most.

2. Specific Groups/Professions

• Family Caregivers: If you qualify for a family care credit, you could get up to $5,000. For someone making $50,000, that’s a 10% income boost, more than covering the tariff costs.

• Social Security Recipients: If you make less than $35,000, there is no tax benefit (you’re already not taxed on Social Security). Between $35,000–$60,000, most get less than $100. Those earning more than $65,000 will get the biggest boost.

• Service Workers (Tips): If tips are tax-free, someone making $60,000 (half in tips) could save $7,000 in taxes yearly — huge (assuming you paid taxes on tips before)

• Overtime Workers: The more overtime you work, the more you save.

• Businesses: Companies win big with tax breaks on research, equipment, and production.

• High Earners (SALT Cap Removal): Removing the SALT cap helps people with high state/local taxes who can itemize — mostly upper-income earners.

If you’re in these groups, you might keep more money. But how should you invest it? The investing game is changing with Trump as president.

HERE is how I’m planning to invest in 2025.

Catch you on the flip side.