A new president means new developments for your finances. To better prepare for the possibilities to come, check out these potential changes to your finance from US News My Money.
A Third Stimulus Payment
The days leading up to the Georgia Senate elections were filled with discussions from both parties that lawmakers should provide more stimulus relief. The measure received support from then-President Trump, and in a January 10 tweet, Biden stated that $600 “is simply not enough when you have to choose between paying rent or putting food on the table. We need $2,000 stimulus checks.”
So should you expect another stimulus check?
According to Jonathan Brogaard, a finance professor at the University of Utah’s David Eccles School of Business, you can.
“I expect there will be a third stimulus check,” he told US News My Money.
Citing a 1.5% boost in the stock market after Democrats flipped the Senate, Borgaard added, “My view is that the market response is driven by the increased likelihood of a third stimulus check, and that the market thinks that additional stimulus will increase firms’ valuations.”
Even so, the onus ultimately falls on Congress. It’s also unclear whether the government will offer the whole $2,000 or $1,400 to supplement the $600 payments. Either way, you will likely receive your benefit by the end of March.
Will a Biden presidency mean more or fewer taxes for you? According to Yeva Nersisyan, an associate economics professor at Franklin & Marshall College in Pennsylvania, it hinges on your income.
“Anyone with an income of $400,000 or more will see a tax increase, while those with lower incomes – below $160,000 – will probably see a tax reduction because of a whole host of proposed tax credits,” she told US News My Money.
That’s good news if your income falls below $400,000 (particularly $160,000). Still, Curtis Nicholls, an associate accounting professor at Bucknell University in Pennsylvania, notes that taxpayers will likely pay higher taxes for goods and services, regardless of income tax reforms.
Nicholls added that corporate taxes would probably rise. “The change in corporate taxes could have a more direct impact on the average American as companies may pass on the increased cost by way of price increases.”
But overall, Nicholls said that “for the average US resident, taxes should change very little.”
Student Loan Relief
Nicholls also said that the government might extend some assistance to student loan borrowers. “President-elect Biden has indicated his favor for forgiving a portion of outstanding borrowers. Immediately after the election several Democratic officials began calling for an executive order forgiving $50,000 of student loan debt. President-elect Biden’s proposal was slightly more modest at $10,000,” he explained.
“Either way, I would expect some level of forgiveness. There has also been some movement toward addressing the long-standing preferential treatment for student loans with regard to bankruptcy forgiveness.”
Students and their families could also get more clarity regarding miscellaneous college expenses in the future. “Along with the potential for student loan forgiveness, the new administration may begin building on Obama-era reform that required more transparency in college costs,” Nicholls continued.
Will Delavan, an associate economics professor at Lebanon Valley College in Pennsylvania, supported Nicholls. “It looks like Biden is going to try to help make student loans and grants more affordable, transparent and available,” he told US News My Money.
Utilities And Energy Expenses
Most people don’t think of their utility bills when a new administration comes into power. However, Nicholls expects some Americans will enjoy lower energy costs or tax breaks on energy-efficient vehicles.
“I would anticipate an expansion of federal tax credits for renewable energy. This could benefit consumers buying a new car or seeking to make their home more energy-efficient,” Nicholls said.
Alternatively, energy expenses might increase for some households. “Energy policy may shift, curbing controversial energy production such as fracking and drilling in certain areas. This shift could drive up short-term utility prices until more sources of renewable energy are implemented,” Nicholls explained.
Real Estate And Home Loans
Biden’s presidency is unlikely to impact your monthly rent or mortgage payment compared to the pandemic, according to Ron Throupe, an associate professor at the Franklin L. Burns School of Real Estate and Construction Management at the University of Denver’s Daniels College of Business.
“The residential real estate markets have seen price increases in the recent past, and suburban markets have been particularly strong with migration from cities with current COVID-19 restrictions and ability to work remotely,” he told US News My Money.
“Residential prices will be relatively flat as COVID-19 subsides, demand softens as economic recovery stretches out and interest rates begin to rise as a reaction to further economic stimulus.”
So if you plan on renting someplace else, Throupe predicts rent will decline, “particularly in cities as leases roll over and remote work becomes an ingrained work option coming out of COVID.”
A September 23 report from Moody’s Analytics projected that Biden’s “Build Back Better” proposal would generate 18.6 million jobs. Researchers also estimated that the economic plan would boost middle-class workers’ annual incomes by $5,000.
But regardless if Congress approves this plan, Delavan cautioned against assuming you’ll receive a raise or find a new career in the near future. “Job creation is not like instant coffee. If someone actually knew how to easily create jobs, then we would just pay that person and voila: instant jobs. But jobs do not instantly appear by fiat,” he said.
And with the pandemic still ongoing, there’s a chance that job creation could struggle as much in 2021 as it did in 2020. But hopefully, when things subside, everyone will enjoy better financial security.
- Williams, Geoff. “6 Changes for Your Finances Under President Biden .” U.S. News & World Report, U.S. News & World Report, 20 Jan. 2021, money.usnews.com/money/personal-finance/family-finance/articles/changes-for-your-finances-under-president-biden.