Taxes play a central role in the campaigns of both major party candidates for president in 2024. No matter who is elected, taxpayers may see substantial changes. A major question is whether, and to what extent, provisions of the 2017 Tax Cuts and Jobs Act will be allowed to expire in 2025. Former President Donald Trump is aiming to make the individual tax cuts permanent and Vice President Kamala Harris is offering more limited support. Both candidates say they will eliminate income taxes on tips and expand the Child Tax Credit. Each also has some unique tax programs in mind, with Trump planning a sweeping increase in tariffs on imported goods and Harris generally aiming to raise taxes on higher earners, while assisting lower-income taxpayers with initiatives such as a downpayment credit for homebuyers.
A financial advisor can help you develop a plan to protect and advance your financial interests as tax policy develops over the next few years.
Key Tax Issues
One significant issue in the 2024 election is what will happen to the Tax Cuts and Jobs Act, parts of which are set to expire at the end of 2025. The key provisions of the 2017 law that might expire include a number of changes focused on individual taxpayers. These include parts of the law that:
- Doubled the standard deduction,
- Reduced the top income tax rate from 39.6% to 37%,
- Capped state and local tax deductions at $10,000,
- Doubled federal estate and gift tax exemptions,
- Doubled the Child Tax Credit.
Without action by Congress, these and other provisions of the bill will end on the first day of 2026 and federal taxes will revert to their 2017 levels. However, it’s likely that at least some of the expiring provisions will get a new lease on life. Trump, for instance, supports making the individual tax changes permanent. The Harris campaign has insinuated that it would not extend these cuts for those earning $400,000 or more.
New Tax Proposals
In addition to taking different approaches to the TCJA, the candidates also have some new ideas. For instance, the proposed 2025 budget issued by outgoing President Joe Biden in spring 2024 (since endorsed by Harris) would subject people making more than $400,000 annually to top rates of 39.6%, up from 37%. The same budget also would increase Medicare taxes on people earning more than $400,000 annually from 3.8% to 5%.
The budget plan also targets capital gains taxes for higher earners. Specifically, people earning more than $1 million annually would pay taxes on investment earnings as if they were ordinary income rather than at the lower capital gains rates.
Both candidates have voiced support for eliminating income taxes on tip income. Both have also expressed intent to increase the Child Tax Credit. Harris is suggesting a credit of up to $6,000 for families with newborns and Trump has supported doubling the credit to $5,000.
Trump has said he would push for an end to income taxes on Social Security benefits. Harris hasn’t addressed taxation of benefits, but supports raising the caps on income subject to Social Security taxes.
Candidates have offered directly opposing views in some areas. Trump would lower corporate income tax rates from 21% to 20% while Harris would increase them to 28%. Harris’ support for the 2025 White House Budget indicates she would end tax subsidies for oil and gas investments as well as tax benefits for like-kind real estate exchanges. In addition, she would end corporate deductions for CEO pay over more than $1 million annually.Each candidate has also offered ideas in tax matters the other has not yet addressed. For instance, as a major plank in his platform, Trump supports a 10% tariff on most imports and a 60% tariff on goods from China. Harris has had little to say about tariffs beyond indicating a general willingness to consider some targeted increases. Unlike Trump, however, she has a plan to help assist homebuyers with, for instance, a $25,000 credit to help with a downpayment. Also uniquely, she would trim deductions available for large real estate investors.
Consider consulting a financial advisor for help navigating legislative changes and tax strategies to suit them.
Comparing Trump and Harris on Taxes
Here’s a table showing the two candidates’ positions on some key tax matters:
| Tax Policy | Harris | Trump |
| TCJA individual cuts | Partially extend | Make permanent |
| Child tax credit | Expand up to $6,000 | Expand to $5,000 |
| Tax on tips | Eliminate | Eliminate |
| Corporate tax rate | Raise to 28% | Lower to 20% |
| Tariffs | Limited | 10% base, 60% China |
| Social Security | Raise cap on income subject to Social Security taxes | Eliminate taxes on benefits |
| Housing | Buyer incentives | None |
Candidates have expressed support for other tax matters as well. Harris wants to extend the earned income credit and credits for health insurance premiums. Trump has proposed a tax on large university endowments.
Candidate Tax Policy Limits
Trump’s tax plans so far mostly have to be taken from speeches and interviews rather than formal written declarations of his intent. Given that, it’s hard to know exactly what the former President intends to do if re-elected. For instance, Trump has suggested eliminating all income taxes and funding the government with tariffs, without describing how this would be achieved. Harris’ plans, on the other hand, are visible in greater detail since she indicated support for tax proposals in outgoing President Joe Biden’s 2025 budget.
No matter what they promise while campaigning, presidents maintain the flexibility to change course. One prominent example is the 1990 law increasing taxes that President George H.W. Bush signed after pledging “Read my lips: No new taxes” during the campaign.
Politicians are also subject to constantly changing circumstances, including shifts in the economy that can drastically affect tax revenues. A financial advisor can help you stay on top of market dynamics and monitor changes that may impact your portfolio and taxes.
Finally, Congress has to craft and pass bills to alter the way taxes are collected before the chief executive can sign changes into law. The president has much influence, but rarely can act unilaterally.
Bottom Line
The way Americans pay taxes is likely to be significantly different in the future if the two leading presidential candidates are able to put their campaign visions into action. The tax cuts enacted in 2017 won’t be around in 2026 unless action is taken to extend them, and each candidate has different ideas for how to do that. They broadly agree on some items, such as expanding child tax credits and ending taxes on tips. However, they show little alignment on approaches to Social Security and corporate tax rates. Additionally, Harris has expressed intent to increase taxes on higher-income earners while reducing taxes paid by others, while Trump favors broader cuts that may be more favorable to higher-income taxpayers.
Tips
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- Whatever happens in November, it’s unlikely that changes to tax law will affect 2024 taxes. SmartAsset’s Federal Income Tax Calculator can help you estimate how much you’ll owe or, alternatively, how large your refund check will be.
- Keep an emergency fund on hand in case you run into unexpected expenses. An emergency fund should be liquid — in an account that isn’t at risk of significant fluctuation like the stock market. The tradeoff is that the value of liquid cash can be eroded by inflation. But a high-interest account allows you to earn compound interest. Compare savings accounts from these banks.
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