Taxing Matters: What the 2024 Election Could Mean for Your Taxes

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What the 2024 Election Could Mean for Your Taxes

Taxes are always a hot topic during election season and the 2024 presidential race is no exception. With the possibility of major changes looming, voters are asking the big question: how will the next president shape the tax landscape? Whether you’re concerned about personal income taxes, business taxes or the fate of the 2017 Tax Cuts and Jobs Act (TCJA), there’s a lot at stake. Let’s breakdown the major tax policies that could be on the horizon, depending on who lands in the Oval Office in 2024.

Tax Cuts and Jobs Act of 2017 (TCJA) summary

The Tax Cuts and Jobs Act (TCJA) of 2017 was a landmark overhaul of the U.S. tax code, bringing sweeping changes that impacted individuals and businesses. Its most notable provisions were cuts to individual income tax rates, the doubling of the standard deduction and a reduction in the corporate tax rate from 35% to 21%. While these changes were a boon for many, they weren’t designed to last forever. Key provisions of the TCJA are set to expire in 2025, raising the possibility that many Americans could see their tax bills increase unless Congress acts to extend or make these cuts permanent.

If the TCJA sunsets without intervention, taxpayers could face a return to pre-2017 tax rates, reduced deductions and a rollback of the doubled child tax credit. Candidates in the 2024 election are taking different stances on preserving these cuts or letting them expire, making tax policy a central issue as we head toward November.

Comparing Harris vs. Trump tax plan

The 2024 election could present voters with two starkly different tax visions: one from Kamala Harris, following the Biden administration’s tax blueprint and one from Donald Trump, who would likely seek to extend the TCJA. The following candidate comparisons are based on the methodology from Tax Foundation tracker and will continue to be updated as the candidates issue more detailed tax plans over the coming weeks. 

Individual income taxes

If Kamala Harris continues to follow Biden’s tax policy, expect a push for higher taxes on wealthy Americans. The Biden administration’s proposed budget for 2025 includes a top marginal tax rate increase from 37% to 39.6% for individuals earning more than $400,000. Harris would likely back proposals that reduce the tax burden on low- to middle-income families while targeting high-income earners with increased taxes.

On the other hand, Trump would likely seek to extend the TCJA’s tax cuts, especially for higher-income individuals. His previous policies included lowering the top tax rate and expanding tax credits for businesses and families. Trump’s plan could further maintain or even lower the current tax rates, making the 2017 cuts permanent.

Business taxes

Harris is expected to follow Biden’s footsteps by proposing a corporate tax increase, likely from the current rate of 21% to 28%. This is part of an effort to ensure that large corporations pay their fair share and help reduce the federal deficit. Biden’s administration has proposed a minimum tax on corporations, ensuring that even the most profitable companies can’t sidestep tax obligations.

Trump’s business tax policies would likely focus on maintaining or reducing the corporate tax rate established under the TCJA. His administration has consistently favored a pro-business tax environment, which could lead to preserving the current 21% corporate tax rate.

Payroll taxes

Payroll taxes may also be a topic of discussion. The Biden administration has proposed payroll tax increases for high-income earners to shore up Social Security and Medicare. Harris would likely support this move, advocating additional payroll taxes on those making over $400,000.

Trump has expressed interest in payroll tax cuts in the past, which could reduce the burden on employees and employers. He might revisit these ideas, especially as part of a broader plan to reduce taxes on middle-class families.

Capital gains and dividend taxes

If Harris follows Biden’s plan, we could see higher taxes on capital gains for individuals earning over $1 million, raising the rate from 20% to as much as 39.6%. This move is intended to align capital gains taxes with ordinary income taxes for the wealthiest Americans.

Trump, on the other hand, would likely push to preserve the current long-term capital gains rate, which sits at 20% for high earners or potentially lower it further. Trump’s administration had previously floated the idea of cutting capital gains taxes to stimulate investment.

Credits, deductions and exemptions

Tax credits, deductions and exemptions largely determine how much Americans owe each year. Harris is expected to continue supporting the Child Tax Credit expansion that was temporarily increased during the COVID-19 pandemic, making it a permanent fixture for families. The Earned Income Tax Credit (EITC) could also see further enhancements.

In contrast, Trump’s approach might focus on broadening deductions, particularly for businesses and high-income earners. His previous tax policy encouraged deductions for business expenses, real estate and investments, which could remain a central part of his platform.

Estate taxes

Estate taxes, also known as the “death tax,” will likely be another point of contention. Following Biden’s lead, Harris might propose reducing the estate tax exemption, which is currently set at $12.92 million for individuals. This means more estates would be subject to federal taxes upon the owner’s death.

Conversely, Trump would likely aim to keep or even raise the exemption, preserving a more favorable tax environment for wealthy individuals passing down their estates.

International trade and tariffs

The international trade landscape could also shift depending on who wins in 2024. Harris would likely maintain Biden’s more diplomatic approach to trade while balancing tariffs with the need to rebuild domestic industries. Expect targeted tariffs to remain, especially on goods from countries like China.

Trump, in contrast, would likely return to his “America First” trade policies, using tariffs more aggressively to protect U.S. industries and encourage domestic manufacturing. His approach could see higher import tariffs, raising costs for American consumers but aiming to boost U.S. production.

What will 2024 mean for your taxes?

The outcome of the 2024 election will profoundly impact taxes for individuals and businesses alike. Whether you’re hoping for a continuation of Biden’s policies under Harris or a return to Trump’s TCJA-centered tax agenda, the stakes are high. With key provisions of the TCJA set to expire in 2025, voters will pay close attention to how each candidate plans to shape the tax landscape. No matter the result, understanding the potential changes can help you prepare for what’s ahead.

FAQ

Who is responsible for taxes besides the president?

Taxes are shaped by the president and Congress, which must pass tax legislation and the IRS, which enforces tax laws.

What did the tax cuts and jobs act of 2017 do?

The TCJA lowered individual and corporate tax rates, doubled the standard deduction and expanded the child tax credit, but many provisions are set to expire in 2025.

When do trump tax cuts expire?

Many key provisions of the TCJA will expire at the end of 2025 unless Congress acts to extend them.

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