Both Trump and Harris have proposed several ideas on taxes, some of which are still evolving. Here's an overview of their most significant tax proposals:
Tax Cuts and Jobs Act (TCJA) Provisions
The TCJA, which introduced lower tax rates and a larger standard deduction, will see many of its provisions expire in 2025. Trump aims to extend these cuts and potentially lower taxes further, though he hasn't provided specific details yet. Harris, who voted against the TCJA, has promised not to raise taxes for those earning less than $400,000 a year. However, to keep that promise, some TCJA tax cuts might have to stay in place. She supports raising the tax rate for high earners back to 39.6%, similar to pre-TCJA levels, and has suggested higher taxes on investment income and Medicare for those earning over $400,000.
Corporate Taxation
Trump plans to reduce the corporate tax rate to 20% and eliminate the corporate alternative minimum tax (CAMT), introduced in the Inflation Reduction Act. Harris, meanwhile, proposes increasing the corporate tax rate to 28%, and she would raise the CAMT to 21%. She also wants to increase the tax on stock buybacks and prevent large companies from writing off compensation over $1 million for top employees. Additionally, her proposal includes increasing the tax deduction for small business startup expenses from $5,000 to $50,000.
Individual Income Tax Changes
Trump suggests exempting restaurant and hospitality workers’ tips from income and payroll taxes, and he also wants to make overtime pay tax-free. However, experts warn these changes could be exploited by businesses. Harris supports exempting tips from income taxes as well but proposes safeguards to prevent employers from cutting wages in response. She also has measures to stop high earners from reclassifying their bonuses to avoid taxes. Trump has expressed interest in removing taxes on Social Security benefits as well.
Child Tax Credit
Trump's running mate, J.D. Vance, has proposed a $5,000-per-child tax credit, but Trump hasn’t officially backed it. Harris advocates for increasing the child tax credit to $3,600 for children under age six and to $3,000 for older children. She also supports expanding the Earned Income Tax Credit and healthcare subsidies for low-income families.
Capital Gains Taxation
Harris plans to tax unrealized capital gains for individuals with a net worth over $100 million, meaning they'd be taxed on the appreciation of assets they haven’t sold yet. She also wants to increase the capital gains tax for high-income earners and tax these gains at ordinary income tax rates. For those inheriting large estates, she proposes taxing unrealized gains at death, with exemptions in place for smaller estates.
The Current Housing Proposals
Trump has hinted at offering tax incentives for first-time homebuyers but hasn't given any specific details yet. In contrast, Harris has a more detailed plan, which includes down-payment assistance for families who have rented responsibly and tax incentives for builders creating affordable homes for first-time buyers.
Tariff Policies
Trump has been vocal about raising tariffs, including a standard 10% on imports, with much higher rates for products from countries like China. He has even floated the idea of replacing income taxes with tariffs, though critics argue this would increase costs for lower-income Americans.
Overall Impact
While Trump’s tax plans are estimated to add $5.8 trillion to the federal deficit over the next decade, Harris’s proposals are projected to increase it by $1.2 trillion. However, the actual impact will depend on how Congress shapes and approves these policies. Refer to the tax overview for business tax provisions and individual tax provisions outlined in more detail from sources summarized here.
Sources:
Tax Cuts and Jobs Act
Budget of the U.S. Government Fiscal Year 2025
