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The outcome of the upcoming elections is likely to significantly impact future tax legislation. Notably, many tax provisions enacted under prior tax legislation, commonly called the Tax Cuts and Jobs Act (the "TCJA"), will automatically expire on December 31, 2025. As a result, the future presidential administration and Congress will likely need to address these expiring tax provisions with new tax legislation, thus making tax a significant issue in this election cycle. While neither former President Trump nor Vice President Harris has published detailed tax proposals, each candidate included high-level tax proposals on their websites (here and here). Aside from eliminating taxes on tips paid to service workers, each candidate's tax proposals are quite different and are summarized below.
Former President Trump proposes:
- Reducing the corporate income tax rate from 21% to as low as 15%;
- Imposing a 60% tariff on all U.S. imports from China;
- Enacting baseline tariffs on foreign-made goods imported from countries other than China;
- Making various TCJA provisions permanent, including the increased standard deduction as well as the increased Child Tax Credit;
- Providing tax incentives for home ownership;
- Eliminating taxes on social security benefits for the elderly;
- Providing tax credits for unpaid family caregivers for the elderly;
- Eliminating taxes on overtime pay; and
- Eliminating taxes on tips for service and hospitality workers.
Vice President Harris proposes:
- Increasing the corporate income tax rate from 21% to 28%;
- Increasing the long-term capital gains rate from 20% to 28% for persons earning at least a million dollars per year;
- Increasing the excise stock on certain corporate stock buybacks from 1% to 4%;
- Enacting a 20% minimum tax on billionaires' unrealized appreciation;
- Expanding certain deductions for new small businesses from $5,000 to $50,000;
- Ensuring that individuals with incomes below $400,000 will not pay more taxes, while scaling back certain TCJA provisions benefitting persons earning more than $400,000;
- Increasing the Child Tax Credit from $2,000 to $3,600, making the credit fully refundable, and providing an additional $6,000 tax credit for newborn children;
- Expanding the Earned Income Tax Credit; and
- Eliminating taxes on tips for service and hospitality workers.
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