What a Democratic Majority in the Senate Could Mean for Your Finances

Stimulus checks and increased healthcare subsidies are just some of the policies currently on the table.

It's official: The Democrats have secured control of both the presidency and Congress. But what does this mean for your finances?

It'll be easier for Democrats to pass more moderate policy proposals for at least the next two years. However, the majority is narrow, so it will remain challenging to push through more controversial legislation. Here are some policies we might see enacted and how they'll impact your bottom line.

Another round of coronavirus relief

Additional coronavirus relief will likely be a top priority for Congress in the coming months. Biden and Democratic lawmakers have already been pushing for the increased $2,000 stimulus payments. This could mean a third stimulus check of either $2,000 or $1,400. A $1,400 check would subtract the most recent $600 payment from the proposed $2,000. Whether you're struggling to make ends meet, paying off debt, or trying to boost your savings, another stimulus check would be a welcome development for many Americans.

Another relief package could come as early as March. In addition to increased stimulus payments, it could also include additional unemployment benefits and business loans. If you qualify for unemployment or run a small business, additional coronavirus relief could mean more money for you.

Affordable healthcare and prescription drugs

Healthcare will be another central priority for the coming administration, which wants to help average Americans save money on healthcare. We probably won't see an overhaul of the Affordable Care Act, and Biden's plan to introduce a public option for health insurance will face serious obstacles in a Senate that is barely left of center.

Instead, we're likely to see a series of adjustments to the Affordable Care Act that could help middle class Americans afford healthcare more easily. For example, Biden's plan would raise the income ceiling on who can receive subsidized healthcare plans through the marketplace. The goal is to provide all consumers with a healthcare option that doesn't exceed 8.5% of their income.

Currently, the subsidy ceiling sits at four times the poverty level -- typically just over $50,000 a year. If you already qualify for a subsidy, you could see an increase in the amount you receive. If you're just above the income ceiling, you might become eligible for a subsidy that would make healthcare more affordable if you buy your own plan.

Lowering the cost of prescription drugs has also been on the Democratic agenda for some time. Biden wants to achieve this by allowing Medicare to negotiate drug prices and limiting launch prices for new drugs and price increases for existing drugs. Should this legislation pass through Congress, anyone who is on Medicare or buys medication out of pocket is likely to see a significant decrease in their medication costs.

Changes to your income tax rate

To pay for these proposals, along with other increases in spending, Biden plans to raise taxes. If you make more than $400,000 per year as a household, you could see an increase in your taxes. For example, one estimate shows a family that makes over $1 million per year would pay an effective tax rate that's 3% to 4% higher under Biden's tax plan.

If you make less than $400,000 per year, you're unlikely to see a substantial change in the income taxes you pay. That said, some lower and middle class families could see tax cuts in the form of additional tax credits, should Biden be able to enact the tax plan he ran on.

These are just some of the policies that could impact your wallet. It remains to be seen whether or not these proposals will become law. But knowing what might be on the horizon can help you plan for the future.