Feature
Harris vs. Trump on Tax Policy
With large pieces of the 2017 Tax Cuts and Jobs Act (TCJA) set to expire in 2025, taxes will be a top priority for the next presidential administration and Congress. But so far, neither major party candidate has unveiled a detailed tax plan.
Vice President Kamala Harris, the Democratic Party nominee, has proposed several policies that build on President Joe Biden’s recent budget plans. These include higher taxes on the wealthy and corporations and more generous tax breaks for lower-income workers, families, and small businesses. Harris has backed Biden’s pledge not to raise taxes on those earning less than $400,000. However, neither the campaign nor the administration has released a plan on how it would handle the TCJA expirations.
Former President Donald Trump, the Republican nominee, has called for making the TCJA permanent. He has also proposed raising tariffs and adopting tax breaks for tips, overtime pay, and Social Security benefits.
Using the information currently available, we break down each candidate’s stance on tax policy.
Extending the Tax Cuts and Jobs Act
Harris
The Biden-Harris administration has called for raising the top individual income tax rate from 37 percent to 39.6 percent. Harris has not offered detailed plans for the rest of TCJA, though Harris has pledged not to raise taxes on those earning less than $400,000.
Trump
Trump has said he plans to extend expiring provisions of the TCJA. Keeping these provisions and restoring certain business tax breaks would provide a tax cut at each income level, on average, but provide greater benefits to those above $450,000 in annual income.
In September, Trump announced he would eliminate TCJA’s $10,000 cap on the state and local tax (SALT) deduction, which was enacted as part of the 2017 law to offset the total cost.
Children and families
Harris
Harris wants to restore the temporary expansions of the child tax credit (CTC) and earned income tax credit (EITC) under the American Rescue Plan. The EITC for workers without children would be raised to $1,500. CTC would go from $2,000 per child to $6,000 for newborns, $3,600 for children under 6, and $3,000 for those ages 6–17. She would also make the full CTC benefit available to households earning little or no income.
Low-income families with children would gain $2,750 on average from the combination of the expanded CTC and the additional credit for newborns. The EITC change would give the average household in the bottom two quintiles a tax break of $720.
Trump
Making the TCJA permanent would maintain the child tax credit at $2,000 per child.
The average tax break for taxpayers with children in 2026 would be $490 for families with low incomes and $1,430 for those with middle incomes.
Trump’s running mate, Sen. JD Vance, has suggested raising the credit to $5,000, but the campaign has not released further details.
Housing
Harris
Harris has proposed expanding the low-income housing tax credit and creating new credits for homebuilding projects in certain low-income communities.
Trump
No tax policies proposed.
Business Tax Incentives
Harris
Harris proposes raising the deduction for startup business expenses from $5,000 to $50,000 and simplifying the tax filing process for small businesses.
Harris has also proposed an “America Forward tax credit” for investment “in key strategic industries.” However, the campaign has not yet provided details on how the credit would work.
Trump
Certain business tax breaks were reduced to help offset the cost of the TCJA. Making these business provisions more generous would modestly boost after-tax incomes.
Environment and Energy
Harris
No tax policies proposed. Harris was the tie-breaking vote in the Senate on the Inflation Reduction Act.
Trump
Trump has said he would rescind unspent funding for the clean energy tax incentives created by the Inflation Reduction Act.
When we scored prior House Republican legislation to repeal these tax breaks, we found they would modestly increase taxes at all income levels.
Corporate Taxes
Harris
Harris favors raising the corporate tax rate from 21 percent to 28 percent, a change previously called for by Biden.
Harris has also proposed raising the excise tax on stock repurchases from 1 to 4 percent.
Trump
Trump has proposed cutting the corporate tax rate from 21 percent to 15 percent, with the lower rate only applying to domestic production.
Capital Gains Taxes
Harris
Harris supports raising the tax rate on long-term capital gains to 33 percent (a 28 percent rate plus a net investment income tax rate of 5 percent). Harris also has indicated she supports a new tax on unrealized capital gains tax on the wealthy with a net worth of $100 million.
Trump
No tax policies proposed.
Social Security
Harris
No tax policies proposed.
Trump
Trump has said on social media that households should not have to pay taxes on their Social Security benefits. Exempting benefits from taxes would primarily help those earning between $63,000 and $200,000.
Tariffs
Harris
Since taking office, the Biden-Harris administration has imposed a 100 percent levy on imported electric vehicles (EVs) and levies on batteries, steel, aluminum, solar cells and semiconductors. These tariffs will raise about $11 billion over the next decade. Because the tariffs are more modest than the Trump proposal, our model estimates these tariffs will not have a measurable impact on household incomes.
Trump
During the campaign, Trump has called for a 10 percent tariff on all imports and 60 percent tariffs on imports from China. TPC analysis found that the plan would raise $2.8 trillion in net revenue and reduce after-tax incomes for the average American household by 1.8 percent. TPC also analyzed a more aggressive 20 percent worldwide tariff, which would raise $4.5 trillion in net revenue and reduce after-tax income, on average, by 2.9 percent.
Tips
Harris
At an August campaign rally, Harris announced her support for tax-free tips. Her campaign has not released a detailed plan on how the Harris administration would implement the proposal. We scored possible options for exempting tips from tax, finding that few households would benefit.
Trump
In June, Trump proposed ending federal taxes on tips. The campaign has not yet released details on how the Trump would implement the proposal.
Overtime
Harris
No tax policies proposed.
Trump
During a campaign rally in September, Trump called for eliminating taxes on overtime. One potential model for such a proposal is legislation passed in the state of Alabama that temporarily exempts overtime pay from its income tax.
Related reading
- TPC: Trump Tariffs Would Raise Household Taxes And Slow Imports
- Reassessing the Tax Cuts and Jobs Act
- Kamala Harris And Her Tax Proposals: A Primer
- Five Unanswered Questions About Kamala Harris’s Tax Agenda
- Here’s A Tip: ‘No Taxes on Tips’ May Be Good Politics But Is Bad Policy
- Biden’s New Taxes for Billionaires: One Is Hard, One Is Easy
- The Booming Economy, Not The 2017 Tax Act, Is Fueling Corporate Tax Receipts
- A New Study Suggests Congress Could Raise Money By Increasing Capital Gains Tax Rates To 47 Percent. But There Is A Catch
- A Newborn Tax Credit Could Be Worthwhile, With Sound Administration
Project credits
- Research Joseph Rosenberg
- Design Christina Baird
- Development Aleszu Bajak and Rachel Marconi
- Writing Dana Ferrante
Photo: Whitehouse.gov