What a Trump presidency could mean for your wallet: Lower capital gains tax, cuts to food benefits

• A collection of policy recommendations titled Project 2025 proposes an overhaul of the federal government for an effective conservative administration.
• The suggestions involve reductions to food assistance and student loan forgiveness initiatives, modifications to tax brackets and a reduction in interest rates for high-income investors.
• Although some of the changes proposed in Project 2025 could be implemented through executive action, many would require congressional approval, which may be challenging in a divided government.

The Heritage Foundation, in collaboration with over 100 right-leaning organizations, has developed Project 2025, a set of policy proposals that both political parties are discussing as the presidential election approaches.

If enacted, Project 2025 would bring major changes to Americans' finances.

The Heritage Foundation's 900-page "mandate" proposes a federal government overhaul and sweeping policy changes that would impact families' taxes and savings, with the aim of paving the way for an effective conservative administration. The project was launched in 2022 and the policy collection was published in April 2023.

Democrats have used Project 2025 as a model for what a second term from former President Donald Trump could entail. Biden's campaign website includes a page on the project, characterizing it as a blueprint for Trump's implementation.

Inflation for June 2024 is shown in a single chart. Gen Z is open to purchasing fixer-upper homes, but some express regret about their decision. Lower inflation indicates a smaller 2025 Social Security cost-of-living adjustment.

In recent weeks, Trump has expressed his disapproval of the policy proposals.

Trump wrote on July 11 that he has no knowledge about Project 2025, as he has not seen it and does not know who is in charge of it. Unlike the successful Republican Platform, he claims to have had no involvement in its creation.

The playbook's creators, who include several former Trump staffers, have been embraced by Trump despite his lack of endorsement for the treatise. A video from April 2022 shows Trump speaking at a Heritage Foundation gala about the group's plans.

"Trump stated, "This is a great group, and they will establish the foundation and outline specific plans for our movement's actions and your movement's actions when the American people grant us a massive mandate to save America.""

The Trump campaign did not respond to requests for comment.

""For over two years, we have been emphasizing that Project 2025 does not represent any candidate or campaign. We are a group of over 110 conservative organizations advocating for policy and personnel recommendations for the next conservative president," a spokesperson from Project 2025 stated."

The organization stated that it is ultimately up to President Trump, whom they believe will be the next president, to decide which recommendations to implement.

Project 2025's spokesperson said they were unavailable to comment on specific proposals.

The implementation of some changes proposed in Project 2025 may require congressional approval, which could be challenging in a divided government.

Here are some of the plans that would affect household finances.

Cuts to food benefits

The SNAP program, a federal initiative that offers financial assistance to low-income individuals for purchasing food, requires several changes as per the project proposal.

In Project 2025, one suggestion proposes that more recipients may need to fulfill work requirements to receive their benefits. Another plan aims to address the issue where individuals can enroll in food stamps even if they are already receiving another benefit, such as TANF assistance.

The Biden administration's decision to increase food stamps for families during the pandemic is characterized as an "excessive measure" by the project authors. Additionally, they urge the next conservative president to "oppose attempts to transform federal school meals into a guaranteed program."

The SNAP director at The Food Research & Action Center, Salaam Bhatti, stated that these changes would have devastating impacts on families.

The removal of this essential element of our safety net would lead to an increase in poverty-related, preventable hunger, poor health outcomes, higher healthcare costs, and lower academic performance among students whose families rely on SNAP to provide food, according to Bhatti.

An end to student loan forgiveness

The U.S. Department of Education's loan forgiveness programs for federal student loan borrowers may face drastic cuts as per Project 2025.

The elimination of the Public Service Loan Forgiveness initiative and the Borrower Defense regulation would result in the loss of debt cancellation for nonprofit and government workers and defrauded students after a decade of payments.

The SAVE plan, which is the Biden administration's new repayment plan for student loan borrowers, would also be terminated under the project's provisions.

Aissa Canchola Banez, the political director for Protect Borrowers Action, stated that if Donald Trump implements his right-wing manifesto, it will cause economic instability for millions of student loan borrowers and their families.

A 'simple two-rate individual tax system'

In 2025, several provisions enacted by Trump through the Tax Cuts and Jobs Act (TCJA) will expire, including lower federal income tax brackets, a larger standard deduction, increased child tax credit, and higher estate and gift tax exemptions, among others.

Trump has advocated for extending the TCJA in its entirety, while Project 2025 suggests a more straightforward individual tax system consisting of a flat 15% and 30%. This system would become effective once the Social Security wage base reaches $168,600 in 2024.

The plan would simplify tax calculations by eliminating many deductions, credits, and exclusions, including those for state and local taxes and education.

According to Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center, if the proposed tax changes were enacted, some taxpayers would pay more and some would owe less, based on their current income, credits, deductions, and exclusions.

The plan includes the possibility of a consumption tax, such as a national sales tax or business transfer tax, in the second phase.

Historically, Congress has not shown support for consumption taxes, according to Gleckman.

'Substantial cut' to taxes on investment income

The proposed tax reduction for higher earners includes a decrease in the top rate from 20% to 15% for capital gains and qualified dividends under Project 2025.

The plan would remove the NIIT, a 3.8% tax on assets with MAGI over $200,000 for single filers and $250,000 for married couples, resulting in a combined capital gains tax rate of 20.8% for top earners.

According to Gleckman, if the proposal is enacted, it would result in a significant reduction in taxes for individuals who derive their income from investments.

Adding 'universal savings accounts'

While Project 2025 does not prioritize retirement, the plan recommends the establishment of "universal savings accounts" (USAs) with a yearly after-tax contribution limit of $15,000, adjusted for inflation.

The tax treatment of USAs would be similar to Roth individual retirement accounts, which allow tax-free withdrawals of earnings after age 59½, with some exceptions. However, USAs are highly flexible for investments, and gains can be withdrawn at any time for any purpose.

Some policy experts support USAs, while others argue that lower earners may struggle with voluntary retirement contributions and may not benefit from the proposed higher annual limits.

"Alicia Munnell, director of the Center for Retirement Research at Boston College, stated that the top one-third of savers are adequately taken care of and do not require any additional subsidized savings."

On July 9, X reported that Project 2025 does not support reducing Social Security benefits.

The mandate emphasizes balancing the federal budget as a vital goal.

Munnell stated that with increasing worries about the Social Security trust fund's solvency, the two statements cannot be consistent.

The annual trustees' report in May revealed that the Social Security trust fund is projected to run out of funds by 2035, which could result in a benefit cut of at least 20% if Congress does not take action.