What the Midterm Election Results Mean for Your Money

(Bloomberg) -- Americans handed Democrats a thumping midterm victory on Tuesday, and with it, a mandate to fix their money problems. In survey after survey, voters voiced their anger over the state of the US economy, especially the cost of essentials like food, gas and housing.

Many voters now expect their newly elected leaders to do something to lower the cost of living and help them save. But it's rarely that simple. Congress can't control markets and GDP growth, much less gas prices and groceries. And while candidates have pledged to push back on tariffs and the Iran war, much still lies in President Donald Trump's control. Nevertheless, elections matter, and the results could have long-term consequences in areas like taxes, retirement, AI regulation and more. Here is what the reversal of power in Congress could mean for your personal balance sheet.

Trump's signature economic accomplishment was last year's passage of the One Big Beautiful Bill Act. Democrats won't be able to unwind the bill's major provisions, like tax cuts for high earners, since Trump has veto power over legislation. They could act to extend some of the OBBBA's temporary provisions that they favor, according to Alvina Lo, head of advice, planning and fiduciary services at BNY Wealth.

Those temporary provisions include deductions for a portion of overtime pay and tip income, as well as an additional deduction for taxpayers aged 65 and older. Also on the table is the status of the state and local tax, or SALT, deduction, which is set to revert from its current $40,000 cap to its prior level of $10,000 at the end of 2029. Some Democrats from high-tax states like New York and New Jersey have called for eliminating the SALT cap entirely.

Some state and local results may also have national implications. In California, voters appeared on track to defeat a tax on billionaire wealth and approved a measure making a higher marginal tax rate permanent. That suggests a broad wealth tax like the one floated by Massachusetts Senator Elizabeth Warren and others is unlikely, Lo said, though there's an appetite at the state level to raise marginal tax rates. Those moves could give wealthy Americans continued reason to leave high-tax states. Those who can't move will likely keep setting up trusts in states considered tax-friendly, such as Delaware and Nevada, to reduce their state income tax, said Lo.