President-elect Donald Trump aimed to restore financial relief to middle-class households by reducing their taxes, but how practical are his assurances?

Experts have weighed in on Trump’s key initiatives, which include eliminating taxes on tips, overtime pay, and Social Security, capping credit card interest rates, allowing the deduction of auto loan interest, removing the cap on state and local tax (SALT) deductions, and boosting the child tax credit. Here’s a summary of their insights:

Vice President Kamala Harris also endorsed this idea during her campaign.

However, the feasibility of this plan hinges on its implementation, according to experts. Trump has not provided specific details.

“It’s unclear if this applies only to income tax or if it also includes FICA,” stated certified public accountant (CPA) Richard Pon from San Francisco.

FICA, or the Federal Insurance Contributions Act, is a payroll tax shared by employees and employers, deducted from each paycheck to fund Social Security and Medicare. As individuals pay FICA taxes, they earn credits that determine their Social Security benefits in the future.

Experts warn that even if the proposal advances, most workers may not see significant advantages. “Only 5% of those in the lowest earnings quartile receive tips and could benefit from the proposal,” the Brookings Institution, a nonpartisan think tank, noted in a September commentary. “Among tipped workers, 37% earn so little that they do not owe federal income tax and thus would not benefit.”

Employers would not have to pay their FICA obligation on tip income. However, restaurant owners “actually gain from taxes paid on tips,” Pon explained. Owners of food and beverage establishments with tipped employees may qualify for the FICA Tip Credit, which allows them to receive a credit for the FICA tax on certain tips paid to employees.

“A tax credit offsets their taxes dollar-for-dollar and is more beneficial than a deduction,” Pon added.

Pon cautioned that “the plan may be misused. Some people earn double or even triple time for overtime, which would incentivize employers to categorize regular income as overtime.”

Trump mentioned that the initiative would incorporate unspecified “guardrails” that “could mitigate these behavioral impacts,” according to a report by the Committee for a Responsible Federal Budget (CRFB) in September. The CRFB estimated that this plan could decrease government revenue by $250 billion to $1.4 trillion and between $1 trillion and $5 trillion if all eligible workers transitioned to hourly pay.

In September, Vice President-elect JD Vance stated that both income and payroll taxes would be eliminated on overtime pay for hourly employees.

The Congressional Budget Office estimates that Social Security’s trust fund will run out by 2035, leading to a 23% reduction in benefits. Trump’s suggestion could hasten the fund’s depletion by two years and Medicare’s by six years, according to the center-right Tax Foundation. Taxes collected from Social Security benefits also contribute to funding Medicare.

Approximately 40% of nearly 70 million beneficiaries pay federal income taxes on their Social Security benefits, as stated by the Social Security Administration. However, this percentage continues to rise each year because the income thresholds used to determine tax liability are not adjusted for inflation.

Lacking a strategy to compensate for the lost revenue, this proposal is seen as “idealistic rather than realistic,” said Phil Battin, founder and CEO of Ambassador Wealth Management.

Data from the New York Federal Reserve indicates Americans currently have a historic $1.64 trillion in auto debts.

This idea is akin to how mortgage interest can be deducted if taxpayers choose to itemize their deductions (a choice most do not make), but with a significant distinction: vehicles, unlike homes, depreciate in value, Battin pointed out.

He cautioned that Americans “might start to trade in their cars more frequently” to upgrade their vehicles due to this financial incentive, potentially leading to higher levels of debt.

Sen. Bernie Sanders, I-Vt., is in favor of this concept, however, Czerniak expressed skepticism over its viability. He stated that imposing limits on what banks can charge may represent government overreach.

“Laissez-faire Republicans in the House might not support this,” he noted.

The SALT deduction cap primarily impacts affluent individuals living in high-tax, predominantly Democratic states such as New York and California. They can no longer deduct their substantial property taxes and state income or sales taxes on their federal tax returns.

According to the Committee for a Responsible Federal Budget (CRFB), completely removing the SALT cap would cost roughly $1.2 trillion over the next ten years and would mainly benefit wealthier households, with about 92% of the tax reduction going to the top 10% of earners, while fewer than 1% would benefit the bottom 60%.

House Ways and Means Committee Chair Jason Smith (R-Mo.) stated last month that “there is no way to pass an unlimited SALT deduction in a Republican-led House.” He assured that there would “definitely be a higher cap” instead.

Czerniak suggested that the deduction cap might increase to either $15,000 or $20,000.

Some analysts interpreted this statement as an indication of potentially eliminating earning prerequisites, which could exceed $2 trillion in costs over the first ten years and be “a significant shift for Republicans,” as noted by Angela Rachidi and Matt Weidinger, senior scholars at the conservative American Enterprise Institute, in August.

“When the Democrats introduced their temporary 2021 expansion that eliminated the CTC’s work requirement, not a single Republican supported that bill, and many cited the removal of the earnings requirement as their primary opposition reason,” they pointed out.

This article has been revised to correct a typographical error.