President Donald Trump’s proposed tax initiatives promise lower rates, fewer deductions, and big shifts in how income is taxed. However, the real question for everyday Americans is simple: Will I come out ahead or lose money?
Learn More: Trump Wants To Eliminate Income Taxes: Here’s How Much Extra You’d Take Home If You Make $125K a Year
Find Out: 4 Low-Risk Ways To Build Your Savings in 2025
Here are four types of people who will lose and make money due to Trump’s new tax initiatives.
Trending Now: Suze Orman’s Secret to a Wealthy Retirement–Have You Made This Money Move?
High-Income Earners Win
The proposed plan would cut the top individual tax rate from 37% to 30%, significantly reducing tax liability for households earning over $400,000.
“Wealthy individuals will likely seize the opportunity of idle capital gains, given their new ability to offset this with additional depreciation,” said Hector Castaneda, certified public accountant (CPA) and principal at Castaneda CPA & Associates.
“Additionally, removing the SALT deduction cap would likely nudge the wealthy towards second homes or moving to income-tax states and spending less because philanthropy will become a little less attractive (at least from a financial perspective).”
Read More: Trump Wants To Eliminate Income Taxes — Here’s How Much Extra You’d Take Home If You Make $150K a Year
Parents Could Gain, But Not Equally
If passed, Trump’s plan would expand the Child Tax Credit from $2,000 to $2,500 per child. While most families with children are expected to benefit, middle-income households are anticipated to gain the most, with average credits approaching $3,000.
While the tax credit could help offset the rising cost of living, education and childcare expenses for most middle-class families, low-income families may not receive the full benefit. In addition, if funding for programs such as SNAP, childcare subsidies or Medicaid is cut to offset tax breaks, lower-income parents and children could end up worse off overall.
“Major cuts to SNAP and Medicaid will negatively impact child health outcomes, educational achievement and overall well-being,” said researchers in a report for Georgetown Law School’s Center on Poverty and Inequality.
Some Business Owners Stand to Gain
Pass-through businesses could see a lower flat tax or expanded deductions, especially if Trump’s proposal to cap business takes 15% to 20% passes.
Entrepreneurs and gig workers using LLC structures may benefit from an expanded Qualified Business Income (QBI) deduction, streamlined tax reporting and potentially reduced tax rates. These provisions are designed to reward small businesses and self-employment.
“These tax cuts provide much-needed relief to small businesses and individuals, and encouraged billions of dollars in economic activity and investment,” said Javier Palomarez, founder and CEO of the United States Hispanic Business Council (USHBC). “Extending these cuts would allow businesses to invest and grow at a faster rate.”
However, critics at the Center on Budget and Policy Priorities (CBPP), a government watchdog agency, said that the pass-through business deduction disproportionately favors high earners.
“Heavily skewed in favor of high-income people, the deduction effectively cuts the top tax rate on this pass-through income by 20%, to 29.6%, compared to the 37% top rate that applies to wages and salaries,” CBPP researchers said.
Seniors on Fixed Incomes Could Lose Benefits
Seniors on fixed incomes may face unique challenges under Trump’s tax proposal.
To offset tax cuts, Trump has signaled potential changes that could affect seniors. For example, the budget plan proposes $700 billion in Medicaid cuts and enforced higher cost-sharing for beneficiaries above the poverty line.
According to a Congressional Budget Office memo, an estimated 16 million Americans could lose health insurance as a result of policy changes included in Trump’s “Big, Beautiful Bill,” and two policies incorporated in federal baseline projections.
“The main culprit in the bill as it relates to healthcare is the effect on the Affordable Healthcare Act,” said Steven Conners, founder and president of Conners Wealth Management. “Premiums will most likely increase. For those less fortunate, Medicaid will see less funding, which ultimately puts more pressure on this part of the population.”
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.
More From GOBankingRates
I’m a Realtor: This Is Why No One Wants To See Your Home
3 Things Retirees Should Stop Buying To Save Money Amid Tariffs
How Middle-Class Earners Are Quietly Becoming Millionaires — and How You Can, Too
7 Wealth-Building Shortcuts Proven To Add $1K to Your Wallet This Month
This article originally appeared on GOBankingRates.com: 4 Types of People Who Will Lose (and Make) Money Due to Trump’s New Tax Initiatives
