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Writer's pictureCorrine Atlas
Oct 12, 20244 min read

Trump vs. Harris Tax Plans: A Comprehensive Analysis to Make an Informed Decision

In today’s political climate, tax policies play a pivotal role in shaping both the personal finances of American families and the economy as a whole. With upcoming changes in tax policies potentially affecting middle-income Americans, it's crucial to understand the key differences between former President Trump's tax proposals and Vice President Harris's tax strategies. This analysis focuses on how each policy could impact small business owners, families, and individual taxpayers in "Main Street America." We want you to understand the economic impact these plans could have on your life and finances—without bias or political fanfare.




Current Tax Environment: Where Are We Now?


Before diving into each candidate's tax plans, it’s essential to understand the current tax landscape. The Tax Cuts and Jobs Act (TCJA), enacted during the Trump administration, will expire at the end of 2025. This was one of the largest tax legislations in 30 to 40 years, with many temporary benefits, particularly for small businesses and individual taxpayers. The corporate tax rate cut to 21% was made permanent, but tax cuts for small businesses and individuals will phase out, resulting in higher rates starting in 2026 unless further action is taken.




The Key Differences Between Trump and Harris Tax Plans


1. Individual Tax Rates:


  • Trump’s Proposal: Former President Trump plans to extend the TCJA. The highest individual tax rate would remain at 37%, benefiting high earners.

  • Harris's Proposal: Vice President Harris has indicated her intention to increase tax rates, particularly for the wealthiest Americans. This includes raising the highest bracket back to 39.6%, which would affect both high-income and, indirectly, middle-income households.


2. Child Tax Credits:


  • Harris: A significant feature of Harris's tax plan is an increase in the Child Tax Credit from $2,000 to $6,000 per child for the first year and reduced levels thereafter. The credit will phase out at $200,000 for single filers and $400,000 for married couples, benefiting middle-income families.

  • Trump: Trump plans to keep the existing Child Tax Credit at $2,000 per child, allowing the credits already introduced under TCJA to continue.


3. Small Business Taxation:


  • Harris: Harris proposes an expanded startup cost deduction of up to $50,000, but this benefit is primarily for new businesses and does not provide additional relief for existing small businesses.

  • Trump: Former President Trump wants to extend the Qualified Business Income (QBI) deduction, which allows existing small businesses to deduct 20% of their business income. Trump also favors maintaining 100% bonus depreciation, which enables businesses to fully deduct the cost of qualified assets in the year they’re purchased.



4. Capital Gains Taxes:

  • Harris: Vice President Harris proposes increasing the maximum capital gains rate from 20% to 28%, targeting wealthy investors. This plan also includes a proposal to tax unrealized capital gains, affecting individuals whose assets have appreciated but have not been sold.

  • Trump: President Trump plans to maintain the current 20% rate on long-term capital gains, as introduced in TCJA, to encourage investment in the economy.


5. Corporate Tax Rates:

  • Harris: Under Harris's plan, corporate taxes would increase from 21% to 28%, a measure aimed at raising government revenue.

  • Trump: Trump’s plan is to reduce the corporate tax rate further to 20% and provide additional reductions for corporations manufacturing in the U.S.


6. Social Security Taxes:

  • Trump: President Trump has suggested eliminating taxes on Social Security benefits for retirees, a proposal that would provide financial relief to seniors.

  • Harris: There has been no comparable proposal from Harris on this front.





Strategies for Small Business Owners:

If you’re a small business owner, it’s crucial to understand how these changes can affect you. Trump’s plan clearly favors continuing to provide tax cuts, such as QBI deductions and bonus depreciation, which help small businesses grow. In contrast, Harris’s proposal emphasizes helping new businesses with initial startup deductions, which is less beneficial for already established businesses.


How Each Plan Affects the American Dream:

  • Homeownership: Harris’s plan includes significant support for first-time homebuyers, offering up to $25,000 in down payment assistance plus a $10,000 tax credit. However, there is a concern that this increased purchasing power could further drive up already inflated home prices, given the current low housing supply. Trump's policy, focusing on expanding opportunity zones, aims to increase housing supply through development, which may lead to a more natural reduction in home prices.

  • Work and Family Incentives: Both Trump and Harris have proposals regarding untaxed income streams like tips and overtime. Trump’s additional proposal to eliminate taxes on overtime pay could directly benefit hourly workers, providing them with more disposable income without a tax penalty.


Whether it’s tax credits for families, breaks for small businesses, or policies on corporate taxation, each tax plan offers unique benefits and drawbacks. Harris's plan largely focuses on providing more assistance to low- and middle-income families, promoting new business startups, and raising taxes on corporations and high-income individuals. Trump, on the other hand, looks to extend existing tax cuts, maintain low capital gains rates, and create incentives for domestic business growth.

These decisions will impact the future of the American economy and individual financial health. As you evaluate which policies may benefit you, consider both your immediate needs and how these policies align with your vision of the American Dream. Remember, a successful financial future requires proactive planning. Consulting a tax advisor will ensure you take advantage of every opportunity—regardless of who is in office.


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