2024 Presidential Election Tax Proposal Summary

With the 2024 presidential election only a few days away, voters have seen a multitude of different policy proposals from both candidates, with tax policy being at the forefront. Although these are just proposals and would have to be passed through Congress to be enacted, it’s important to know what has been proposed to weigh the potential tax impact you will face.

Here’s a look at the federal tax proposals of both Democrat candidate Vice President Kamala Harris and Republican candidate former President Donald Trump.

BUSINESS TAXES

Trump

• Lower corporate income tax rate from 21% to 15% for companies that produce in the United States
• Make the provisions under the Tax Cuts and Jobs Act (TCJA) permanent:
  • Qualified business income deduction (QBI)
  • 100% bonus depreciation on qualifying new assets placed in service
  • Immediate R&D expensing

Harris

• Increase corporate income tax rate from 21% to 28%
• Increase the maximum deduction for start-up and organizational expenses from $5,000 to $50,000 for new businesses
  • Under current law, a new business can deduct up to $5,000 of start-up and organizational expenses, with the remaining needing to be capitalized and amortized over 180 months
• Proposed a standard deduction for small businesses – unclear as to amount and qualifying factors

INDIVIDUAL TAXES

Trump

• Make the provisions under the Tax Cuts and Jobs Act (TCJA) permanent:
  • Tax rates
    • Rates prior to 2018: 10, 15, 25, 28, 33, 35, and 39.6 percent
    • Rates under the TCJA (2018-2025): 10, 12, 22, 24, 32, 35, and 37 percent
  • Increased standard deduction – nearly doubled with the TCJA
  • Child tax credit
    • Child tax credit under the TCJA is $2,000 per child
    • VP candidate, JD Vance, discussed increasing the child tax credit to $5,000 per child – unclear whether the Trump Campaign has endorsed this proposal
• Remove the $10,000 state and local tax deduction cap, allowing taxpayers to deduct all of their state and local taxes paid as an itemized deduction
• Create an itemized deduction for auto loan interest
• Exclude social security, tip income, and overtime pay from income tax

Harris

• Increase the top tax rate back to 39.6% (pre-TCJA rate)
• Promised that households with income under $400,000 will not be subject to a tax increase
• Exclude tip income from income tax
• Expand the child tax credit to $6,000 for children under the age of one, $3,600 for children ages 2-5, and $3,000 for older children
• Increase the earned income tax credit for workers without dependents
• Provide a $25,000 tax credit for first time home buyers

CAPITAL GAINS

Trump

• No current proposals

Harris

• Increase the top tax rate on long-term capital gains to 28% for taxpayers with taxable income over $1 million (current top rate: 20%)
• Increase the net investment income tax (NIIT) rate on investment income to 5% (current rate: 3.8%)
• Demonstrated support of Biden’s proposal to tax unrealized capital gains for taxpayers with a net worth over $100 million

ESTATE TAXES

Trump

• Make the provisions under the Tax Cuts and Jobs Act (TCJA) permanent:
  • Estate tax exemption in 2024 is $13.61 million per person ($27.22 million for a married couple)
  • If the TCJA expires, the exemption is expected to cut nearly in half, indexed for inflation

Harris

• No current proposals

TARRIFS AND TRADE

Trump

• Establish a universal baseline tariff on all US imports of 10%
• Establish a 60% tariff on all US imports coming from China

Harris

• No current proposals

No matter the outcome of the election, major tax changes are expected in 2025. Tax planning will be imperative to create tax strategies that will reduce lifetime tax liabilities and help you and your business reach your goals. Our team at Kirsch CPA Group is staying on top of these proposals and future legislative changes to help you model out different scenarios to make the best decisions for you and your business.

Contact us for your Tax Planning needs

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