Battle of the Tax Plans Unveiling the Stark Differences Between Presidential Candidates' Proposals
One part of making your decision
Article Highlights:
- Tax Position Comparisons
- Tax Cuts and Jobs Act
Who are you going to vote for in November? Although taxes may not be the sole item leading to your decision of who to vote for in the Fall elections, it is one of many factors to consider. There is a Tax Olympics brewing in D.C. as the two parties jockey for votes. Here is a summary of their presumed positions on taxes based upon what little information is currently available. It is presented in table format so you can directly compare their probable positions.
HARRIS – TRUMP TAX POSITION COMPARISON |
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TAX ATTRIBUTE |
CURRENT |
HARRIS |
TRUMP |
Tax Cuts & Jobs Act (TCJA) (See details after this table) |
Trump’s signature tax reduction legislation that reduced taxes, generally thought to benefit the wealthy the most, but middle-income taxpayers also benefitted. |
Would like to repeal It |
Wants to extend it, possibly expand tax cuts |
See the separate comparison table following this one that displays the key tax provisions of TCJA |
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$400,000 additional Tax Threshold |
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Biden vowed not to raise taxes on people making less than $400,000. News reports are that Harris will honor that pledge. |
No position |
Tip Income |
Subject to tax like any other earned income |
No position |
Wants to make tips tax free |
Social Security Income |
Up to 85% of SS benefits may be taxed, depending on the amount of the taxpayer’s other income |
No position |
Has said seniors shouldn’t have to pay tax on Social Security benefits |
Low Income Family Tax Credit |
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One of Harris’s 2020 campaign promises was to provide middle-class and working families with a refundable tax credit of up to $3,000 ($6,000 married couples) a year to help keep up with living expenses. The credit would phase out and be totally phased out at income of $100,000. |
No similar proposal |
Tariffs |
Tariffs are taxes imposed on U.S businesses that import goods from foreign countries. The tariffs are added to the cost of products, thus paid by the U.S. consumer. |
No position |
Has floated the controversial idea of replacing the income tax with tariffs. For more detail on this see the Tax Foundation article at: https://taxfoundation.org/blog/trump-income-tax-tariff-proposals/
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Electric Vehicle (EV) Tax Credits |
There is a maximum $7,500 non-refundable tax credit for the purchase of certain new EVs and $4,000 maximum credit for purchasing certain used EVs. |
No stated position |
Trump has expressed his dislike for the credits on electric vehicles and instead wants to take advantage of the U.S.’s vast energy reserves, so the EV credits may be in jeopardy. |
Excise Taxes |
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No known position |
No known position |
Payroll Taxes |
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No known position |
No known position |
TAX CUTS & JOBS ACT
The Tax Cuts and Jobs Act (TCJA), signed into law by then President Donald Trump, became effective beginning January 1, 2018. This was the largest tax legislation in 30 years and impacted both businesses and individuals. However, nearly all the provisions in it were temporary, with most provisions expiring after 2025. Congress made most of the changes temporary as a way to limit the impact on the federal budget.
It slashed the corporate tax rate to the benefit of mostly higher earning shareholders. It reduced the alternative minimum tax (AMT) and approximately doubled the estate tax exemption and provided a 20% deduction for pass through business income. These and other key provisions of TCJA are outlined in the following table.
As noted earlier, Harris would like to repeal TCJA while Trump has indicated he would extend it.
Once individual tax cuts expire after 2025, the Tax Policy Center estimates that the majority of taxpayers—53.4%—will face a tax increase: 69.7% of those in the
middle quintile will pay more, compared to just 8% of the highest-earning 0.1%.
TAX CUTS & JOBS ACT |
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TAX ISSUES |
Repeal TCJA HARRIS |
Extend TCJA TRUMP |
Corporate Tax Rates |
Would like to return the rate to 35% |
Current rate is 21% (reduced from 35% by TCJA). Trump has indicated he wants to reduce it by another percentage point to 20%. |
Individual Tax Rates |
Would return to the pre-TCJA rates of 10% to 39.6% |
Keep TCJA rates of 10% to 37% |
Capital Gains Tax Rates |
Zero rate for taxpayers below the 25% regular tax bracket, 15% for those in the 25% to 35%, and 20% for those above the 35% bracket. |
Zero for those with a taxable income below $47,026 (single) and $94,051 (joint). 15% rate if taxable income is between $47,026 and $518,900 (single), $94,051 and $583,750 (joint). These numbers are for 2024 and are inflation adjusted. |
Personal Exemptions |
$5,050 for each taxpayer and qualifying dependent, as adjusted for inflation in 2024. |
Suspended – Thus zero |
Standard Deduction Note: TCJA roughly doubled the 2017 standard deduction adjusted for inflation. |
Approx. 50% of the 2024 amounts
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Rates are Inflation adjusted, for 2024:
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Itemized Deductions |
See a special listing of itemized deduction differences below. |
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Alternative Minimum Tax (AMT) |
The exemption amount and phaseout threshold of individual AMT will revert to pre-TCJA amounts which are substantially lower and will trigger the AMT more frequently for lower income taxpayers. |
Would be Extended |
Child Tax Credit |
$1,000 |
$2,000 |
Employer Payments of Student Loans |
Employer-Provided Educational Assistance funds will no longer be able to be used to make payments up to $5,250 towards an employee’s student loan debt. |
Employer-Provided Educational Assistance funds can be used to make payments up to $5,250 towards an employee’s student loan debt. |
Exclusion from gross income of discharge of indebtedness on principal residence |
Would no longer apply. |
Would be extended. |
Estate Tax Deduction |
Would revert to the 2017 amount adjusted for inflation. Estimated to be approximately $ 6.68 Million. |
$13.61 Million for 2024 |
Employer Credit for Paid Family and Medical Leave |
Would Expire |
Would be Extended |
Work Opportunity Tax Credit |
Would Expire |
Would be Extended |
Qualified business income (QBI) deduction |
Would end the 20% deduction for pass-through businesses |
Would be Extended |
ABLE Accounts |
Contributions based on earned income of disabled taxpayer would no longer qualify for the saver’s credit. Rollovers to Sec 529 plans would no longer be allowed. The contribution limit would revert to pre-TCJA amounts. |
Would be Extended |
Moving Expenses |
Would restore the above-the-line deduction for qualified job-related moves. |
Would continue the current suspension of the deduction for all except certain taxpayers in the military. |
ITEMIZED DEDUCTIONS |
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Tier 2 Miscellaneous Itemized Deductions |
Would reinstate the deductions for employee business expenses such as job travel, union and professional dues, job education, certain legal fees, investment expenses, tax preparation fees, safety deposit box, etc., subject to a 2% of AGI reduction |
The deductions would continue to be suspended as under TCJA |
Taxes (state and local income tax, property taxes) |
There would be no deduction limit. |
The $10,000 “Salt” limit would continue to apply. |
Casualty Losses |
Would reinstate the deduction for casualty losses which were suspended under TCJA unless associated with a declared disaster area. |
Only casualty losses associated with a declared disaster area (Disaster Losses) would be allowed. |
Home Mortgage interest |
Would revert to pre-TCJA rules which limit the home mortgage interest deduction to the interest on $1 Million of home acquisition debt for a combination of 1st and 2nd homes and would allow a Sch A home equity interest deduction on up to $100,000 of home equity debt. |
Except for grandfathered debt, the home mortgage interest deduction would be limited to interest on $750,000 ($375,000 MFS) of acquisition debt for a combination of 1st and 2nd homes. No deduction for equity debt. |
Cash Charitable Contributions |
Limited to 50% of a taxpayer’s AGI |
Limited to 60% of a taxpayer’s AGI |
Overall Limit |
The rule that limited itemized deductions to the lesser of 3% of AGI or 80% of those allowable for the year will return. |
Continues to be suspended |
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