The presidential election between Vice President Kamala Harris and former President Donald Trump will take place on November 5. Both candidates have made tax proposals at various times during the campaign.
Alert: Pay close attention to taxes. While taxes certainly aren’t the be-all and end-all, they are a significant factor to consider. Following is a brief overview of some highlights of each candidate’s announced tax proposals as of this writing.
Harris tax proposals
The vice president would mainly build on positions supported by the Biden administration.
• Child Tax Credit: Currently, the maximum Child Tax Credit (CTC) is $2,000, but it was temporarily raised to $3,000 ($3,600 for younger children) by the American Rescue Plan Act (ARPA). Harris would restore the higher maximums and provide a $6,000 credit for children under one year old, $3,600 for children aged two through five and $3,000 for children aged six and older.
• Housing incentives: Harris has proposed an array of housing incentives, including expansion of the low-income housing tax credit and a new tax credit for the construction of starter homes. She would also establish a $25,000 assistance program for first-time homebuyers.
• Health insurance premium credits: Harris would extend or make permanent the expansion of health insurance premium tax credit subsidies included under ARPA. Currently, the extensions are set to expire at the end of 2025.
• Corporate tax rates: Harris’ campaign has indicated she has proposed an increase in the corporate tax rate from 21% to 28%.
• Tips: Harris would end taxes on tips received by workers in service industries.
Trump tax proposals
Most of the former president’s tax agenda revolves around preserving provisions in the Tax Cuts and Jobs Act (TCJA) set to expire after 2025.
• Corporate tax rates: The TCJA established a flat tax rate of 21% for corporations. Trump has proposed a reduction to 20%.
• University endowments: Trump has proposed taxation of large private university endowments to fund the “American Academy.” This provision would credit prospective students for past coursework and use their credentials to apply for jobs with the U.S. government and federal contractors.
• Tariffs: The former president has floated the idea of using an “all tariff” system to eventually replace the existing income tax structure. This would include 10% tariffs across the board.
• Gift and estate taxes: Under the TCJA, the unified federal gift and estate tax exemption was doubled from $5 million to $10 million, with inflation indexing ($13.61 million for 2024), but it’s scheduled to revert to $5 million, with indexing, in 2026. Trump would make the higher exemption permanent.
• Social Security benefits: Currently, Social Security benefits are taxable under a complex formula. Trump has indicated he would exempt benefits from tax.
• Tips: Trump would end taxes on tips received by workers in service industries. Each candidate has made other references to tax policies without stating any concrete specifics.
Tip: You can expect their tax platforms to continue to evolve as Election Day nears.