In the early hours of November 6, as the U.S. presidential election results favored Donald Trump, analysts suggested a common takeaway among many Americans: Trump’s win likely ensures that lower taxes will continue.

For the previous year, many Americans were preparing for the expiration of the 2017 Tax Cuts and Jobs Act (TCJA), often referred to as the Trump tax cuts. This act represented the most substantial rewrite of the tax system in three decades and introduced significant tax cuts for both individuals and businesses. A majority of the individual tax benefits, such as reduced tax rates for nearly all, will end after 2025.

With Trump returning to the presidency and his party holding majority control in Congress, experts predict that the TCJA will likely be extended.

“Our clients felt a sense of relief, especially those who might not have supported his candidacy,” said Daniel Milan, managing partner at Cornerstone Financial Services in Southfield, Michigan. “It’s a way for them to cope with the loss of Vice President Kamala Harris, almost a form of self-comfort,” he explained.

What benefits will Americans see if the Trump tax cuts are prolonged?

In the short term, Americans could anticipate a healthier investment portfolio and economy. Their 401(k)s and other stock market portfolios have already experienced significant growth, driven partly by the assumption that Trump will maintain or even reduce corporate tax rates, according to some analysts. Following the election, the Dow Jones Industrial Average and the S&P 500 reached all-time highs and have remained robust since.

“Businesses that hesitated to invest due to election and regulatory uncertainties may soon be looking to reinvest,” noted chief international economist James Knightley from Dutch Bank ING.

This trend could positively influence corporate profits and stimulate economic growth, economists suggest.

Scott Anderson, chief U.S. economist at BMO Economics, has increased his economic growth prediction for 2025 to approximately 2.2%, up from 1.9%. He stated, “Trump’s victory may give a temporary boost to both consumer and business confidence along with stock market performance.”

Reduced tax rates. One of the most notable changes for many Americans involves lower income tax rates. The highest tax rate has fallen from 39.6% to 37%, the 33% bracket was reduced to 32%, the 28% bracket decreased to 24%, the 25% bracket slipped to 22%, and the 15% rate dropped to 12%. The lowest bracket remains at 10%, while the 35% tax bracket sees no changes. If these income tax cuts are not extended, the rates will revert to pre-TCJA levels.

With Trump’s victory, Milan said, “there’s a renewed sense of confidence that these cuts will either be extended or made permanent. This is positive news for people’s finances.”

Given the expectation of sustained low-income tax rates, Americans can take their time with Roth IRA conversions, advised Jim Czerniak, chief investment officer at Ambassador Wealth Management in Warrenville, Illinois.

A Roth conversion involves changing a traditional pre-tax IRA, SEP IRA, SIMPLE IRA, or 401(k) into a Roth IRA. This process requires individuals to pay income tax on the converted amount upfront, but they can then make tax-free withdrawals later. Additionally, Roth IRAs do not have required minimum distributions.

Estate planning: Wealthy individuals can also take a breath regarding asset disposition to minimize tax liability. The TCJA increased the federal lifetime gift tax exemption and adjusted it for inflation. In 2024, each person has a combined federal estate and gift tax exemption of $13.61 million. This amount will be halved by the end of 2025.

“This had been a major focus for clients, but the outcome of the election turned those discussions irrelevant,” Milan added.

What are the potential drawbacks for consumers if the TCJA is extended?

The primary downside is the potential increase in the burgeoning budget deficit, which may not be immediately noticeable, according to economists and advisers.

The nonpartisan Committee for a Responsible Federal Budget estimates that fully retaining the Trump tax cuts could raise the federal deficit by $4 trillion to $5 trillion over the next decade.

An escalating deficit could lead to higher inflation and increased long-term interest rates, experts warn. This rise could trigger spikes in the prices of everyday necessities like groceries, rent, and services, making borrowing more costly for both individuals and businesses.

“Theoretically, the Federal Reserve might have to pause its monetary easing too soon or even reverse it if inflation spirals out of control,” Anderson noted. “However, this scenario is more pertinent to 2026 than to 2025.”