As the 2024 election approaches, taxes remain a critical issue for voters. Both former President Donald Trump and Vice President Kamala Harris have proposed tax policies that could significantly affect individuals, families, and businesses. While each candidate’s approach targets different segments of the population, understanding how these tax plans may impact your financial future is key to making an informed choice at the ballot box.
In this article, we’ll break down the differences in their tax plans, focusing on what matters most to you: your income, your family, your business, and your long-term investments.
The author has taken all reasonable efforts to ensure the accuracy of the information provided in this article at the time of writing. However, tax laws, policies, and regulations are subject to change, and updates may occur that affect the information presented here. This article is for informational purposes only and should not be considered as specific financial, legal, or tax advice. For advice tailored to your individual circumstances, it is recommended that you consult with a qualified financial or tax professional.
Key Takeaways:
- 2025 Tax Changes: The Tax Cuts and Jobs Act is expiring, which means tax rates and deductions will revert to pre-2017 levels unless new legislation is enacted.
- Family & Business Impact: Harris offers bigger benefits for families and first-time homebuyers, while Trump focuses on continuing benefits for small business owners and investors.
- Long-Term Financial Planning: Regardless of who wins, sticking to a personal financial plan that adjusts to tax changes will help secure your financial future.
What’s Changing? The Expiration of the Tax Cuts and Jobs Act
Before diving into the candidates' proposals, it's important to note that the Tax Cuts and Jobs Act (TCJA) — passed during Trump’s presidency — is set to expire at the end of 2025. Many of the tax benefits that Americans have enjoyed over the last few years will revert to pre-2017 levels unless extended or replaced. This includes changes in tax brackets, deductions, and benefits for small business owners.
Here are some key provisions that are expiring:
- Individual Tax Rates: Everyone’s tax rates are set to increase in 2026.
- Standard Deduction: The current higher deduction (around $14,000) could drop to pre-TCJA levels of $5,000–$7,000.
- Child Tax Credit: This popular credit, now at $2,000 per child, could revert to $1,000.
- Estate Tax Exemption: The amount of wealth you can pass to heirs tax-free will be cut in half.
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Let’s now explore how Trump and Harris plan to tackle taxes after 2025.
Capital Gains Taxes: What You Pay on Investments
Harris: Kamala Harris proposes increasing the long-term capital gains tax (the tax on profits from selling stocks, real estate, or businesses) from 20% to 28%. Additionally, she supports a controversial tax on unrealized gains, meaning that even if you haven’t sold an asset but its value has increased, you could still be taxed on that gain. While this primarily targets the wealthy, many worry it could set a precedent for expanding such taxes to the middle class in the future.
Trump: Donald Trump wants to keep the capital gains tax at 20%, as it is today. His stance aims to encourage investment by keeping the tax on profits lower than regular income taxes. He also opposes taxing unrealized gains.
Helping Families: Child Tax Credits
Harris: A key part of Harris’s tax plan is helping families. She wants to increase the child tax credit to $6,000 for families with newborns, and slightly lower amounts for older children. This would be a major boost for families with children, particularly those with lower or middle incomes. The credit phases out at $200,000 for single filers and $400,000 for married couples.
Trump: Trump proposes maintaining the current $2,000 child tax credit that was implemented under the TCJA. While not as generous as Harris’s proposal, it continues the benefits families have been receiving for the past several years.
The best investment you can make is in your own financial literacy and planning
Small Business Owners: Who Gets the Breaks?
Harris: Harris offers a substantial benefit to new businesses, allowing them to deduct up to $50,000 in startup costs. However, there’s little in her plan for existing small business owners, who already make up a large part of the economy.
Trump: Trump’s plan focuses on continuing the TCJA’s 20% qualified business income (QBI) deduction, which allows many small business owners to deduct 20% of their income. He also plans to extend bonus depreciation, enabling businesses to write off the full cost of new equipment in the year they purchase it. These provisions are key to supporting existing businesses.
Home Ownership: Help or Hurt?
Harris: Harris aims to make home ownership more affordable for first-time buyers. Her plan includes $25,000 in down payment assistance and to help with the purchase of homes. While this could be beneficial, some experts worry that injecting more money into a market with already limited housing supply could further drive up prices.
Trump: Trump’s tax policy doesn't specifically target home ownership incentives but focuses on maintaining broader economic growth through business tax cuts and tariffs on foreign companies.
Corporate Taxes: Big Business Impact
Harris: Harris proposes raising the corporate tax rate from 21% to 28%. While this targets large corporations, it may lead to higher prices at the consumer level as businesses pass on these costs.
Trump: Trump plans to reduce the corporate tax rate further to 20% and introduce a lower 15% tax for companies manufacturing in the U.S. He also supports higher tariffs on foreign corporations, encouraging Americans to buy domestic products but may also lead to higher prices at the consumer level.
Other Key Points: Social Security and Tips
- Social Security: Trump proposes eliminating the taxes on Social Security benefits for retirees, a relief for those living on a fixed income.
- Tips and Overtime: Both Trump and Harris support eliminating taxes on tips. Trump has also suggested removing taxes on overtime pay for hourly workers.
Which Plan Works for You?
Ultimately, the decision between the Trump and Harris tax plans comes down to your personal situation and values.
- If you’re a small business owner or investor, Trump’s policies—extending the 20% business deduction, bonus depreciation, and keeping capital gains taxes low—could help you keep more money in your pocket.
- If you’re a parent or looking to buy your first home, Harris’s higher child tax credits and down payment assistance may be more beneficial for your financial goals.
Regardless of which side you favor, it’s essential to consider not just how these policies affect you personally but also their broader impact on the economy and society. Understanding the pros and cons of each tax plan can help you make an informed decision about the future direction of the country.
In the end, as the candidates themselves often say: stay calm, plan wisely, and invest in your future—because no matter who wins, the American dream continues.
When it comes to financial planning, the most important factor isn’t just the policies of politicians, but the plan that you commit to and follow over the long term. While tax policies may shift from one administration to the next, a solid financial plan gives you the ability to adapt and thrive, regardless of the political climate.
In the end, as the candidates themselves often say: stay calm, plan wisely, and invest in your future—because no matter who wins, the American dream continues.
Why Having a Financial Plan Matters
Politicians may promise various benefits, whether it’s tax credits, deductions for small businesses, or support for families. But real financial success isn’t built on short-term political wins—it’s created by sticking to a comprehensive plan that aligns with your personal goals. A well-structured financial plan helps you navigate changes in the economy, prepare for the future, and weather any uncertainty that might come your way.
No matter what tax policies are implemented, your financial plan should still focus on the core essentials
Consider this: no matter what tax policies are implemented, your financial plan should still focus on the core essentials—saving, investing, protecting your wealth, and managing taxes efficiently. Whether you're a business owner, an individual planning for retirement, or a family working toward financial security, your personal strategy is what drives your long-term success.
By staying committed to your financial plan, you can avoid the stress of reacting to every political shift and instead, maintain a steady course toward your financial goals. The best financial plans are built on sound principles, not the promises of any one candidate. They help you:
- Stay disciplined with your savings and investments.
- Make tax-efficient decisions based on what works best for you in any environment.
- Plan for major life events, like buying a home, sending your kids to college, or retiring comfortably.
While it’s essential to stay informed about political changes, the best investment you can make is in your own financial literacy and planning. Don’t wait for the next election to dictate your future—start building or refining your financial plan today. Whether you're just beginning or you need to adjust your strategy, now is the time to ensure you're on track for long-term success.
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Ready to take control? Reach out to our team for a consultation. We’ll help you create a personalized financial plan that fits your life, aligns with your goals, and helps you stay on course no matter what happens in Washington. The American dream is still alive—and with a solid plan, it's within your reach. Let's make it happen together.
