Latest news with #tax cuts
Yahoo
4 days ago
- Business
- Yahoo
50 Money Moves To Make Before the End of 2025
The year will be over before you realize it; and, if you're not careful, critical opportunities to build your wealth will be gone, too. Learn More: See Next: Fortunately, there are plenty of moves to make it through the remaining summer, fall and winter seasons. Doing this now ensures you're hitting your financial goals and kicking 2026 off with a bang when it comes to your money. Keep reading for our full list of 50 money moves to make before the year ends. Also see money moves you should make in every decade of your life. Understand How the 'Big Beautiful Bill' Will Impact Your Finances President Donald Trump's tax and spending megabill, the One Big Beautiful Bill Act, will impact the finances of virtually all Americans. It's important to understand which benefits associated with this bill may work in your favor. Mark Gelbman, financial advisor and owner of Strategic Wealth Solutions, outlined a few areas for families and individuals to consider: The 2017 tax cuts have received a permanent extension, providing long-term certainty for households regarding their tax liabilities. The child tax credit has increased from $2,000 to $2,200. 'Trump Accounts' have been introduced with a one-time deposit of $1,000 from the federal government for children born from 2024 to 2028. According to Gelbman, families receive a 'baby bonus' via the savings vehicle for the next four years — which allows for tax-free growth on contributions up to $5,000 annually until the child turns 18. Americans ages 65 and over will be allowed a $6,000 deduction for tax relief purposes. However, Gelbman said qualifying seniors are individuals who earn no more than $75,000 a year or married couples who make $150,000. Additional considerations include, but are not limited to, increased standard deductions, the ability to deduct tip income and the temporarily raised cap on SALT deductions. Set aside time to meet with a financial advisor to see which aspects of this bill you need to know about before the start of the new year. Find Out: View Next: Clearly Define Your Financial Goals What will you do with your money in 2026? Now's the time to set clear financial goals and prioritize them accordingly. Some of these goals may include buying a home or a car, planning a wedding, having a baby, paying off debt, building an emergency fund and more. Janelle Sallenave, chief spending officer at Chime, recommends making money goals as clear as possible. Doing so not only allows you to break each goal down into manageable steps, but it also gives your money direction and keeps you focused on what matters most for your financial future. Try This: Max Out Employer Retirement Contributions The fall season is a good time to see whether you're on track to max out contributions in your employer-sponsored retirement account. In 2025, you can contribute up to $23,500 in a 401(k) — if you're age 50 or older, you can add an additional $7,500 via catch-up contributions. Max Out Your IRA For 2025, the maximum contribution is $7,000 for an IRA. Those ages 50 and older are allowed to make a $1,000 catch-up contribution as well. Fully Fund Your Health Savings Account (HSA) 'An HSA offers triple tax benefits (deductible contributions, tax-free growth and tax-free withdrawals for qualified medical expenses),' Gelbman explained. 'Many people contribute to an HSA to offset current healthcare expenses, but the balance carries over each year, which means that money can also be invested for the future.' Contribute To a 529 Savings Plan Another tax-advantaged account worth funding is a 529 plan for education expenses. Qualifying expenses — private school tuition for K-12, college tuition, room and board, books, computers and more — can be paid using these funds at any time. Plan To Use Your Flexible Spending Account (FSA) Austin Kilgore, consumer finance expert and analyst with the Achieve Center for Consumer Insights, recommends checking your flexible spending account (FSA) balance. If you have funds in this account, you need to make plans to use them. How soon should you use the funds? Kilgore said to check your plan documents or check in with your HR department for the year-end date associated with your plan. Once you know your given date, use the FSA money on the products or services you need, or you will lose these benefits. That's Interesting: Determine Your Eligibility for Extended Deadlines What if you reside in a federally declared disaster area? Robby J. Graham, CPA and wealth strategist at Waddell & Associates, said you may be eligible to make 2024 contributions to IRAs and HSAs beyond the standard deadlines. He recommended 'consulting a qualified tax professional to confirm your eligibility and the specific postponement date applicable to your state to take advantage of this opportunity.' Build an Emergency Fund Don't already have an emergency fund as a financial safety net? Start building one now that can cover three to six months' worth of expenses (at a minimum). Rebuild Your Emergency Fund Did you dip into your emergency fund this year to pay for an expected medical bill or another critical expense? Use the remaining part of this year to rebuild this fund. See Whether Your Employer Offers an Emergency Savings Account Feeling overwhelmed thinking about how to save three to six months of expenses with five months left in the calendar year? Your workplace may offer an emergency savings account (ESA) to help automate the process. Devin Miller, CEO and co-founder at SecureSave, recommends finding out whether your employer offers an ESA and signing up to have contributions in this emergency fund come directly from your paycheck. Create a Realistic Budget Your financial goals in 2026 might be different than those in 2025 and your budget should be updated to reflect these changes. Gelbman recommends analyzing your 2025 spending and income to create a realistic 2026 budget. Discover More: Identify Important Luxuries in Your Budget If you create an extremely restrictive budget, chances are highly likely you won't stick to it. Ahead of next year, Erica Sandberg, consumer finance expert at said to review your spending and consider purchases or experiences you value most. This can be — as examples — attending a baseball game with your family, getting manicures at a nail salon or going out to dinner with friends. Build these important luxuries into your budget and get rid of things and/or activities you don't need. Plan To Pay Off High-Interest Debt After creating a budget and a fully funded emergency fund, your next priority will be to pay off any high-interest debt you may have accumulated. Consider using the snowball or avalanche repayment methods. The snowball method knocks out debt with lower interest rates and builds up to those with higher rates while the avalanche method starts with highest-interest debt and works down to debt with smaller rates. Put Your Bonus Toward Debt If you're receiving a year-end bonus, Gelbman recommends putting it toward the balance of any debt you're paying off. Put Your Bonus Into Savings Don't have any debt? Put your upcoming year-end bonus into your savings account. Put Your Bonus Into Your Retirement Savings Account Still need to top off your IRA or Roth IRA contributions for 2025? Transfer your upcoming year-end bonus into this account. Check Out: Talk to Your Creditors If You Experienced Hardship This Year If you experienced hardship this year and are trying to pay off your credit cards, Kilgore recommends checking in with your creditors and explaining your situation. According to Kilgore, these creditors might be open to changing credit terms, arranging payment plans, deferring payments or waiving interest. Consider Personal Loans With Lower Interest Rates Can't pay off all your debt this year alone? Kilgore recommends seeing whether you qualify for a personal loan at a favorable rate. Doing so will allow you to pay off debt with higher interest and then just have the one loan leftover with a lower rate. Look Into Credit Counseling 'Sometimes credit counseling can provide a decrease in a credit card interest rate,' said Kilgore. Explore a Debt Settlement This option is ideal for someone who has lost their job or is dealing with major medical expenses and is struggling to make even the minimum payments on what they owe. Debt settlement, Kilgore said, negotiates with creditors to lower principal balances due. Set Up Automatic Savings This money move is as powerful as it is easy. Sandberg said nearly every bank and credit union has a free system that allows customers to have a fixed amount of money seamlessly divert from a checking account into a savings account on a regular basis. 'I recommend smaller increments made twice a month over one big lump sum once a month,' she said. 'For example, you may want to have $50 moved from your checking account on the 1st and then again on the 15th. By the end of the year, you'll have $1,200 saved.' Explore Next: Strive To Save 10% From Every Paycheck You may be financially able to do this as soon as this year or you might need to wait until 2026. In any event, as you set up automated savings, make it a point to save 10% or more from every paycheck. Plan Holiday Budgets From buying Halloween costumes to paying for a Thanksgiving feast and taking a year-end vacation, now's a good time to start assessing your upcoming holiday spending and set aside enough money to cover those expenses. Track Any Tips or Overtime You Earn This ties back in with the new Big Beautiful Bill legislation. Gelbman said taxes on tips and overtime will be deductible for many Americans. Ahead of next year's tax season, Kasey Pittman, CPA and managing director of tax policy at Cherry Bekaert, recommends monitoring upcoming guidance from the IRS and Treasury Department for more information on how new compensation-related provisions will be implemented. This is vitally important for taxpayers who receive a significant portion of their income from tips or overtime. Pittman said it will affect reporting and withholdings. Review and Adjust Your Tax Withholding Before 2025 ends, Gelbman recommends reviewing your income and deductions for the year. This ensures your tax withholding from your paycheck or estimated tax payments are sufficient. 'If you anticipate owing a significant amount come tax time,' he said, 'adjusting your withholding or making an additional payment before year's end can help you avoid underpayment penalties.' Reevaluate Whether You Should Itemize Your Deductions If you typically take the standard deduction when filing taxes, consider revisiting this strategy. 'The new $40,000 cap on the state and local tax (SALT) deduction — up from the longstanding $10,000 cap — may make itemizing more beneficial for those with significant SALT payments,' Pittman said. 'However, high-income individuals may begin to phase out of this benefit under the new overall itemized deductions limitation, so it's worth running the numbers now.' For You: Seniors: Review Your Social Security Income Pittman said Social Security income has not been excluded from taxation under the new law, despite misinformation to the contrary. Rather, a temporary $6,000 deduction was created for eligible seniors — with benefits starting to phase out for individuals earning more than $75,000 (or $150,000 for joint filers). 'Social Security income remains partially taxable depending on other income levels. Seniors should confirm how these thresholds affect their 2025 return,' Pittman said. Take Any Required Minimum Distributions (RMDs) From Qualified Retirement Accounts To do this properly, Richard Craft, CEO of Wealth Advisory Group, said you need to calculate the required minimum distribution (RMD) amount from all qualified sources. The distribution can be taken from any combination of your retirement accounts. However, Craft said it does need to come out of each account specifically. Otherwise, the IRS imposes a 25% excise tax on the amount you were supposed to take out but did not. Explore New Long-Term Savings Options for Children Earlier, we mentioned 'Trump Accounts' as a new savings vehicle for children. If you're expecting a child in 2025, Pittman said it's worth discussing long-term savings strategies now to take advantage of this provision once it goes into effect. Plan Charitable Giving Before Dec. 31, Gelbman said to make charitable donations to claim the tax deductions for 2025. He recommends donating appreciated securities to avoid capital gains taxes while supporting the causes you care about. Make a Qualified Charitable Distribution A qualified charitable distribution is specific to those ages 70 ½ and older. Gelbman said a QCD from an IRA can satisfy your required minimum distributions (RMDs) while also reducing taxable income. Be Aware: Make a Significant Contribution To a Donor-Advised Fund Ideally, this money move should be made by those who regularly find themselves in a high tax bracket or have experienced a liquidity event, like a business sale. Graham said it could provide a current-year tax deduction and flexibility for future charitable giving. Make Gifts of $19,000 Per Recipient Under the Annual Gift Tax Exclusion Craft said gifting money today, without any transfer tax, allows the money to grow outside of your estate for the benefit of the person who receives the gift. Consider making this financial gift to your child, if you're able. 'This allows the money to grow for the child's benefit, which is generally at a lower income tax rate,' Craft said. 'Better yet, give your child money to contribute to an IRA or Roth IRA — which can grow tax deferred or tax free over their lifetime.' Don't Miss Federal Incentives for Clean Energy Vehicles Do you plan to buy a new or used clean energy vehicle? Don't push this purchase out to next year. Make it before the end of September. 'Under the new tax bill, clean vehicle tax credits are only available for purchases made through Sept. 30, 2025,' Pittman said. Explore Home Solar Tax Credits ASAP Another clean energy initiative, which is homeowner specific, are tax credits for residential energy efficiency improvements and home clean energy systems. According to Pittman, these expire after Dec. 31. Small Business Owners: Consider Changing Your Business Structure If you run a small business incorporated as a pass-through entity, like an S Corporation, Pittman recommends assessing the impact of expanded business provisions. A few considerations include changes to depreciation methods, interest expense deductibility and research-related activities. 'The law also raises income thresholds for the Qualified Business Income (QBI) deduction. Some small business owners may find it beneficial to evaluate whether operating as a Qualified Small Business C Corporation makes sense under the new rules,' said Pittman. Read Next: Consider Making an After-Tax Contribution To an IRA This is known as a backdoor Roth contribution. It can grow tax-free for decades and with no RMDs due. However, Craft recommends carefully understanding this strategy and how it must be done before moving forward with it. Rebalance Your Portfolio Graham said the recent market rally may mean now is a good time to rebalance your portfolio. 'In some cases, aligning your asset allocation with your current risk tolerance can also assist in reducing downside volatility and maintaining long-term investment discipline,' he said. Explore Tax-Loss Harvesting To properly do this, Gelbman said you'll need to review your investment portfolio for underperforming assets and sell those investments at a loss. Doing so can help offset capital gains taxes and up to $3,000 of ordinary income. Gelbman said, 'Make sure you comply with IRS wash-sale rules, which state that you cannot sell a security at a loss for tax benefits, but then turn around and buy the same or a similar security within 30 days.' Consult a Tax Advisor Do you need help optimizing the tax-loss harvesting strategy or have questions about how the Big Beautiful Bill may impact your taxes next year? Reach out to a tax advisor for the answers to get ahead for 2026. Check Your Credit Report Can't remember the last time you checked your credit report? Make a point to do it before the year ends. Kilgore said you can obtain reports from major credit reporting bureaus like Experian and Equifax at no charge. Carefully review these reports and see whether there are any inaccuracies. If there are, you can follow the directions on the agency's website to correct them. Trending Now: Check Your Bank Accounts (Daily) Start getting into the habit of checking your savings and checking accounts every day for the remainder of 2025 and beyond. Doing so allows you to know exactly how much money you have available and stop any potential fraud in its tracks. Take Advantage of Financial Tools Speaking of checking your accounts, now's a good time to download banking apps to better understand what's happening with your money and to stay on top of your finances on a regular basis. Update Financial Account Passwords Can't recall the last time you updated the passwords on your financial accounts? Kilgore recommends updating these passwords for additional strength to make them less vulnerable to hackers. Have the Right Cards When's the last time you did an audit in your wallet? Sandberg recommends examining your plastic portfolio before the year wraps and review where you want to pare down or add as needed. Seek Out Small Ways To Save Money Get in the habit of becoming a smart spender and look for small ways you can save money on bills. A few recommendations include washing clothes in cold water, making meals based on what's in your pantry or freezer and walking instead of driving if your destination is a short distance away. View More: Pay Your Bills on Time Admittedly, a lot of what you're reading can sound overwhelming if you haven't checked it all off your list yet. So, let's toss in an easy money move to make: Paying your bills on time. If you're already doing this, great job. If not, set up a system like getting an alert from an online calendar or writing it down on a whiteboard at home. That allows you to see all your due dates and know exactly when to make payments. Talk About Money The end of the year brings with it more occasions for spending money — and embarrassment or anxiety if you're not comfortable telling family or friends you can't afford it. Sallenave recommends leaning into the habit of talking about finances with your partner, family members and friends. Meet With a Financial Advisor If you made it to the end of this list, you might have questions and thoughts regarding your financial bigger picture. Make time to meet with a financial advisor, ask questions and get answers to better plan for the year ahead. More From GOBankingRates Mark Cuban Warns of 'Red Rural Recession' -- 4 States That Could Get Hit Hard 5 Cities You Need To Consider If You're Retiring in 2025 Mark Cuban Tells Americans To Stock Up on Consumables as Trump's Tariffs Hit -- Here's What To Buy This article originally appeared on 50 Money Moves To Make Before the End of 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Washington Post
6 days ago
- Business
- Washington Post
Republicans are adding health care taxes — but not on the rich
Gene Sperling was director of the National Economic Council under Presidents Bill Clinton and Barack Obama and was a senior adviser to President Joe Biden. A core principle of the Republican budget bill was that extending existing federal tax cuts should not be counted as raising the deficit because they are already part of 'current policy.' By the same logic, Republicans argued that letting the cuts expire at the end of this year would be a tax increase.
BreakingNews.ie
22-07-2025
- Business
- BreakingNews.ie
Plan to cut hospitality VAT to 9% to cost up to €1 billion for a year
A plan to cut VAT for hospitality to 9 per cent is predicted to cost up to €1 billion for a year, which is around two-thirds of the €1.5 billion tax package. The Government said that Budget 2026 will bring in €1.5 billion of tax cuts; however, the size of the package could reduce if there is a 'deterioration in the tariff landscape'. Advertisement Announcing the Summer Economic Statement, which sets out the Government's spending and tax cuts plans, Minister for Finance Paschal Donohoe said that increasing the tax package is not the 'right thing to do'. The Budget Day package, set to be announced on October 7th, will be €9.4 billion. This will comprise spending of €7.9 billion and taxation measures amounting to €1.5 billion. Overall spending across current capital will increase by 7.3 per cent for next year. Advertisement If the Government commits to its pledge to cut the VAT rate for hospitality, it will cost around €1 billion, Mr Donohoe said on Tuesday. 'Our Budget Day decisions could change depending on the economic environment we find ourselves in during the summer and beyond,' he added. 'It would not be right to grow the scale of our tax package with everything that we are confronting at the moment. 'Our economy, just by seeing income grow, generates between €1.3 and €1.5 billion each year. Advertisement 'If we were to have a bigger tax package than that, I don't believe it would be the right thing to do, given all we are confronting, but the exact component of what the tax package would be and the other tax measures that would be in it, I can't answer that question until Budget Day. 'I mean the Summer Economic Statement lays out the amount of money that will be available. It never lays out the detail of any one measure.' Mr Donohoe warned that the figures published on Tuesday are based on 'a no-tariff scenario' imposed by the United States. The statement does not set out how the budget will be affected by any change in tariffs, but states that the Government will 'recalibrate its fiscal strategy', adding that it will reduce the size of the package. Advertisement Mr Donohoe published the figures alongside Minister for Public Expenditure Jack Chambers. 'Our Budget Day decisions could change depending on the economic environment we find ourselves in during the summer and beyond,' he said. He said all they can see is 'change and risk' around the uncertainty of trade, investment and politics. 'Of course, none of this is positive for the economy of the world, and by extension, therefore, for Ireland,' Mr Donohoe added. Advertisement 'This is most evident in the debates and negotiations that are underway with regard to trade, which is why us, within the European Union and the (EU) Commission on our behalf, will be redoubling our efforts to negotiate a better deal with regard to trade between the EU between now and August 1. 'Because of all of this, it's very clear that we're at a moment of significant transition to the economy of the world, and even for the economy. But notwithstanding all of this, our economy continues to grow. 'In the first quarter of 2025, our economy grew by almost 3 per cent after a year of strong growth in 2024, and where that strong performance is most evident is in the number of people at work in our country.' Mr Donohoe said it is 'very likely' that negotiations between the EU and the US will reach a conclusion in the coming weeks. However, he said the Government's intention is to be 'flexible' in its approach to Budget Day. 'Our overwhelming priority is to maintain our public capital investment, in particular the figures that will be outlined by Minister Chambers,' Mr Donohoe added. 'However, should economic or budget conditions change, we will amend other elements of budget policy to ensure we get the balance right. 'Minister Chambers and I, in consultation with the party leaders, will continue to assess that balance in the weeks ahead. 'I emphasise that point because Minister Chambers and I are very much aware that we are publishing this statement and committing to a National Development Plan at a moment of uncertainty. 'We know an antidote to some of that uncertainty is certainty regarding our investment plans, and that is what is being outlined here today. We can do so because our economy is resilient.' Mr Chambers said the Government is having to navigate 'serious economic uncertainty'. 'If there's a serious economic deterioration, we absolutely will have to revisit what we're setting out today to be responsible and agile in the context of changing our global position, and we agree on that,' he added. 'So this is very much caveated by what could happen in the coming weeks, and we won't make decisions that aren't sustainable or affordable for the Irish economy.' He added: 'While capital expenditure will increase by €2 billion in line with the National Development Plan review, this will result in total available current expenditure of €97.5 billion, and capital expenditure of €19.1 billion in 2026. 'It will be against this backdrop that budget negotiations will commence with the individual departments in the coming weeks. 'The expenditure ceilings for 2026 will facilitate a budget that will provide for enhanced public service delivery and increased capital investment in critical infrastructure under the new and renewed National Development Plan. 'At the same time, given the profound global economic uncertainty, it's crucial we moderate current spending and provide permanent and sustainable investment, as well as focusing on addressing our infrastructure deficits.'
Japan Times
18-07-2025
- Business
- Japan Times
Japanese markets brace for triple whammy if opposition wins big
Japan faces the possibility of market instability should this weekend's election lead to a dramatic change in the political landscape, particularly if opposition parties gain influence and push for aggressive tax cuts. 'It's possible Japan might experience its own triple whammy of market turmoil, perhaps a Japanese version of the 'Trump crisis' that occurred in April,' said Hideo Kumano, an economist at Dai-Ichi Life Research Institute, referring to a simultaneous fall of stocks, currencies and bonds. Some analysts suggest the possibility of market disruption similar to the crisis triggered by economic measures proposed by then-U.K. Prime Minister Liz Truss in 2022. The Upper House election will take place on July 20, and polls indicate that the LDP-Komeito coalition could lose its majority as parties both to the left and right of it gain ground. The coalition lost its majority in the Lower House late last year. Should the coalition lose big this weekend, Japan could enter a period of uncertainty in which the political fate of Prime Minister Shigeru Ishiba is unresolved and small parties are wooed to join the coalition, or at least work with it, to make governing possible. Campaigning has been unusually dramatic going into the election. Issues related to the role of foreigners in Japan have entered the political conversation, especially with the rise of Sanseito and its "Japanese First" agenda. Relatively controversial platforms have added to the sense of instability and suggest that the mood post-election could remain unsettled. In the event of a power vacuum or power-sharing arrangements with smaller parties, tariff negotiations with the United States could be affected right away. A 25% "reciprocal" tariff is set to kick in on Aug. 1 on most Japanese goods bound for the United States if the two countries are unable to come up with a compromise agreement before then. The loss of the majority and unclear leadership could make last-minute talks difficult and a breakthrough less likely. If no progress is achieved, most Japanese goods will be subject to the full reciprocal tariff —up from the current 10% — while an existing 25% tariff on autos and 50% tariffs on steel and aluminum will remain. Analysts said that these high duties could have significant implications for the economy and for the Bank of Japan and interest rates, which could in turn affect the currency. 'The timing to reach a tariff agreement between Japan and the U.S. and details of the deal will be unclear, so the BOJ will be forced to consider delaying its next rate hike,' Kohei Okazaki, chief market economist at Nomura Securities, wrote recently. If opposition parties gain seats, the government will likely be under intense pressure to introduce expensive policies to help households make ends meet. One possible option being pushed by opposition parties is cutting the consumption tax — currently set at 10% for most products and 8% for food items. 'There is no doubt' Japan will be under additional fiscal strain after the election, Kumano said. Even if the LDP and Komeito manage to maintain the majority, it's likely that they will come up with new economic measures to counter the economic costs of U.S. tariffs, Kumano said. An election poster board in Shinjuku. The LDP-Komeito coalition may lose its Upper House majority following this weekend's election. | Nico Phillips Japanese markets were rattled in recent weeks as tariff negotiations dragged on and as it became clear that the election could lead to a minority government. The yen weakened against the dollar, while stocks are off from recent highs. The yield on 30-year Japanese government bonds surged to a record 3.2% on Tuesday, and the yield on 20-year Japanese government bonds hit their highest level since November 1999. Bond prices move inversely to yields. 'It seems the market has already priced in the possibility of the LDP-Komeito losing its majority,' said Noriatsu Tanji, chief bond strategist at Mizuho Securities. But it's possible that the market has yet to fully price in the worst-case scenario, so volatility could be high after the election, he added. Tanji said he believes cutting the consumption tax rate alone would not pose a serious risk to Japan's fiscal sustainability, but added that the market's perception of Japan's fiscal health is driven by the prevailing mood rather than detailed discussions. It's similar to how a healthy bank might face a run if a rumor about it spreads, Tanji said, adding that markets could be volatile due to the prevailing mood. He added that the exchange rate is more strongly influenced by U.S. factors, so Japan's fiscal expansion alone would not lead to a plunge in the yen. 'I believe the U.S. Federal Reserve will start cutting rates from September, so the yen will be persistently under a certain level of upward pressure,' he said.
Yahoo
14-07-2025
- Business
- Yahoo
Commentary: It's a bad time to rely on the social safety net
Whether Americans want it or not, President Trump and his fellow Republicans are making historic cuts to the nation's safety net programs. It's the biggest test in decades of whether the 'nanny state' really is bloated, as critics insist, or is too essential to get rid of. The experiment will inflict pain on millions. The huge tax bill Trump recently signed contains numerous provisions that will remake the economy by favoring certain industries and classes of workers over others, stimulating spending for a while — and adding at least $4 trillion to the national debt. The two political parties and their supporters will dicker for months over whether the tax cuts help ordinary workers or favor the wealthy too much. Read more: What is the US debt ceiling, and how does it impact you? There's been less focus on various ways the tax law and other actions by the Trump administration will dismantle social welfare, yet those changes could end up more consequential than the tax cuts. Federally funded healthcare and food aid are both set to undergo the biggest cuts in the history of those programs. The changes will come in spurts, and it won't always be apparent that federal policy is to blame. The end result, however, will be a sharp reversal of modern trends, with the nation's social safety net shrinking rather than expanding. The number of Americans lacking health insurance is set to rise by 16 million through 2034. Cuts to food aid will hit another 16 million or so. Some Americans, susceptible to both, will endure an unfortunate double whammy. While these are deliberate policy options chosen by Trump and his fellow Republicans, they'll hit Democratic, Republican, and Independent voters more or less the same. The biggest changes come from the tax law. To offset trillions in lost revenue from keeping tax rates low and enacting new tax cuts, Congress made major changes to Medicaid, the health program for the poor, that will ultimately result in lower coverage rates. The law makes it harder for adults to qualify for coverage, for instance, and to keep coverage once they qualify. The Congressional Budget Office estimates all these changes combined will reduce the number of people covered by Medicaid by 7.8 million by 2034. Other changes in the law will make it harder to qualify for coverage under the Affordable Care Act, at the same time the Trump administration is making its own administrative changes to the ACA and dialing back coverage even more. The Republican-controlled Congress is also likely to let a set of temporary healthcare subsidies expire this year, making ACA policies more expensive for some 4 million people, in some cases prohibitively so. All these changes combined would lower ACA coverage by 8.2 million, according to the CBO. That would add 16 million Americans to the uninsured rolls, raising the uninsured rate from a near-record low of 7.9% now to 9.2% in 2028. KFF forecasts that the uninsured rate would jump the most in Florida, Georgia, Mississippi, Louisiana, and Texas — which all have Republican governors. In Florida, as one example, nearly 1 million people are likely to lose coverage. Healthcare cuts in the tax-cut law will reduce government spending by about $1 trillion during the next 10 years. The reduction in food aid will be small by comparison, trimming $114 billion over a decade. But that will still have widespread effects. The Urban Institute estimates that around 5.3 million families will lose food assistance worth at least $25 per month. At about three people per family, that's 16 million mouths getting a little less. There's never been a cutback of that magnitude in food conservatives argue that welfare programs have gotten out of hand, making some cutbacks necessary. They've long lobbied for work requirements, tighter eligibility standards, and other measures to ensure that aid programs are not abused and are limited to those who need them most. Yet even some Republicans balked at the cuts Trump was pushing for in the tax bill. Two Republican senators voted against the bill because of Medicaid cuts. Republican Sen. Lisa Murkowski voted for the bill, but only after negotiating special exemptions on some Medicaid cuts for her own state. One particular concern for some Republican legislators is the fate of rural hospitals reliant on Medicaid funds to keep their doors open. More rural hospitals have closed than opened during the last 10 years, and many remain unprofitable. The final tax bill included a $50 billion rural hospital fund to offset losses from Medicaid cutbacks. But that probably isn't enough, which means Congress may have to provide more money for these care centers or face voter wrath. Ordinary Americans will notice these changes piecemeal. Some will face higher premiums when they try to renew a policy under the ACA this year or next. In some cases, the cost could jump so much that coverage will become unaffordable. Medicaid enrollees will notice new paperwork requirements to prove they have a job or otherwise qualify. There will be more frequent check-ins and people who can't keep up with the red tape will lose coverage. Some rural hospitals will inevitably close, while others will cut back or eliminate services such as mental health or disability care. There will be more paperwork and tougher cutoff points to qualify for food aid, as well. Voters will have their say. In 2018, they revolted against a new Republican tax cut law by giving Democrats control of the House of Representatives in a 'blue wave' election. And that law included no major benefit cuts, just tax breaks voters thought favored the wealthy over everybody else. Are Americans more prepared for austerity now? There's no reason to think so. High inflation of the past few years has hammered purchasing power and affordability remains a top voter concern. If Republicans cutting the safety net know something the rest of us don't, maybe they should start explaining. Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman. Click here for political news related to business and money policies that will shape tomorrow's stock prices.
