Federal Tax Proposals: Where the Presidential Candidates Stand

The Tax Cuts and Jobs Act (TCJA) brought about a lot of federal tax changes when it was enacted in 2017. Top individual tax rates dropped from 39.6% to 37%, the estate tax exemption was doubled, and some business owners received a 20% pass-through deduction.

These tax provisions are set to expire at the end of 2025 unless Congress extends them, and that could mean substantial changes on the horizon for your tax and personal wealth.

Here’s a look at the federal tax positions of Democratic candidate Vice President Kamala Harris and Republican candidate former President Donald Trump, as well as action you can take now to proactively plan for various scenarios.

Presidential candidates’ tax proposals

Each candidate’s tax proposals would have to pass through Congress to be enacted, but it’s worth knowing what they’ve proposed to weigh the potential tax impact.

	Harris	Trump
Corporate tax rates	Raise corporate tax rate from 21% to 28%	Lower the corporate tax rate from 21% to 15% for companies that produce in the U.S.
Marginal tax rates	Reset the top marginal individual income tax rate from 37% to 39.6%; tax long-term capital gains on individuals making more than $1 million per year at 28%, rather than 20%	Make the lower TCJA top marginal tax rate of 37% permanent
Medicare tax	Increase Medicare tax rate on investment income earned by individuals from 3.8% to 5%	No proposal
Lifetime estate, gift, and GST exclusions	No proposal	Make the TCJA exemptions ($13.6 million for 2024) permanent
Home buying incentives	Enact $25K first-time home buyer down payment assistance	No proposal
High-net-worth individual tax planning techniques	Reduce or eliminate tax benefits involving certain annuities, private placement life insurance, 1031 like-kind exchanges, and carried interest	No proposal
Tariffs	No proposal	Impose 10% baseline tariff on imports; 60% tariff on imports from China
Business tax credits	Enact Neighborhood Homes Credit to incentivize construction of single-family affordable housing Initiate America Forward Tax Credit to promote investment and job creation in critical industries such as AI, data centers, and clean energy	Repeal the Inflation Reduction Act
Child tax credit	$6,000 credit for newborn children	$5,000 credit
Overtime wages	No proposal	Exclude overtime wages from income tax
Tip income	Exclude tips from income tax	Exclude tips from income tax
Limit on immediate deduction for startup business expenses	Increase from $5,000 to $50,000	No proposal
Social security income	No proposal	Exclude social security income from tax

How CLA can help with federal tax planning strategies

With uncertainty of election outcomes and their impact on the future of TCJA provisions, tax planning and personal wealth strategies are particularly complex. Proactive planning and scenario modeling can help you stay ahead of the curve from a personal and a business perspective, regardless of where tax policy lands.

CLA’s team uses modeling tools to plan for a variety of scenarios. For example:

• If you have a large estate, we look at how timing of gifts affects your taxable amount, how to address future appreciation, and why getting a valuation now could be critical.
• If you have a pass-through entity, we can help you understand your options for 2024 deductions and evaluate pros and cons of different entity structures for the future.
• For businesses, we can help you translate implications of purchasing decisions regarding bonus depreciation.
• For individuals, we can analyze itemized deduction strategies and crossover to state deductions and the alternative minimum tax, as well as understand how your tax liabilities interplay with your investment and retirement strategies. 

Contact us

Start planning now for possible federal tax changes. Complete the form below to contact us to discuss proactive scenario planning tailored for your situation and needs.