Ryan J. McDonell, CPA, MSLT, MSA
Tax Manager

As America nears the 2024 presidential election, tax policy has taken a prominent spot in national discussions. Though neither Vice President Kamala Harris, Democrat, nor former President Donald Trump, Republican, have introduced detailed tax reform plans, both frequently address tax issues in their speeches and media appearances. 

Central to the upcoming tax policy debate is the scheduled expiration of the Tax Cuts and Jobs Act (TCJA). Enacted in late 2017, the TCJA represented the largest tax reform in over three decades, but its personal income tax provisions will expire at the end of 2025. Without intervention, this expiration will increase tax rates, reduce the child tax credit, eliminate the 20% qualified business income deduction, and halve the estate and gift tax lifetime exclusion, among other changes.

For a detailed breakdown of the candidates’ tax proposals see our chart: Chart – Presidential Tax Proposals

Trump, touting the TCJA as a key achievement of his administration, intends to extend or make its provisions permanent. This approach would preserve the 37% top personal income tax rate, retain the $2,000 partially refundable child tax credit, and continue to shield more than $6 million of assets or gifts from the estate and gift tax. The TCJA’s 20% top capital gains tax rate and 3.8% net investment income tax on high earners would also remain, and Trump has proposed further reducing the corporate tax rate from 21% to possibly 20% or even 15% in a future term.

Harris, in contrast, favors allowing certain TCJA provisions to expire but pledges to shield taxpayers making under $400,000 from any tax increases. Her approach would revert the top personal income tax rate to 39.6% and cut the estate and gift tax lifetime exclusion by half. Harris also proposes restoring the child tax credit to $3,600, as it was in 2021, and introducing a $6,000 credit for families with infants under one. She has supported a 28% top capital gains tax rate and a 5% net investment income tax. Additionally, she proposes increasing the corporate tax rate to 28%, expanding the deduction for startup costs from $5,000 to $50,000, and establishing a new small business deduction resembling the standard deduction for individual taxpayers.

The current Biden-Harris administration has imposed tariffs on various Chinese imports, including a 100% tariff on electric vehicles and a planned 50% tariff on Chinese semiconductor imports by 2025. Trump, meanwhile, advocates for a universal 10% tariff along with a specific 60% tariff on Chinese goods. He has also floated the idea of a discretionary tariff of 10% to 20% on nations he believes exploit the U.S. economy.

Tax policy has become a focal point in Trump’s campaign, with proposals to eliminate taxes on tips for service workers, make automobile loan interest deductible, and remove taxes on Social Security for seniors. Most dramatically, he has hinted at replacing income tax with a tariff-based system.

In recent months, Harris has distanced herself from some controversial Biden tax proposals, notably the taxation of unrealized gains for high earners—a policy Biden has championed. She continues to endorse a billionaire minimum tax but remains noncommittal on specifics, unlike the Biden administration’s 25% minimum tax proposal on assets over $100 million. Like Trump, Harris has voiced support for eliminating taxes on tips.

While Trump and Harris diverge widely on tax policy, Congress’s composition will significantly affect the likelihood of any sweeping tax reform. Current projections suggest a Republican Senate majority and a Democratic House majority. A divided Congress would likely limit either candidate’s ability to enact extensive partisan changes, especially on tax policy. The upcoming election will decide the path forward, but one thing is certain: tax policy will remain a central issue in America’s future.

As the new administration’s tax proposals become more specific, we will keep you informed.