• The 2024 elections will affect taxes, and no matter who wins, significant policy changes are expected in 2025.
• Trump’s plans could mean tax increases for low-income earners; Harris’ proposals would target higher income earners.
• This is the fourth in a five-part series on the effects of a Trump or Harris presidency on U.S. consumers.

Election Day is fast approaching, and no matter who wins, you’ll likely see changes to your tax bill in 2025.

In the fourth part of a five-part series on BI’s final pre-election episode, Business Insider examines how each candidate’s policies could affect the amount of taxes you pay. (To read first part related to investments, second part about costs and third part regarding housing.)

Each of the following three segments represents a significant segment of the tax-paying population: low- and moderate-income earners, high-income earners, and businesses. BI will explain how a Trump or Harris presidency is expected to affect all three groups.

Low and middle income earners

Under Trump’s proposal, low- and middle-income Americans could see some tax cuts, especially if they’re trying to pay off a car or have a job that relies primarily on tips. Trump has proposed expanding the tax cuts in the Tax Cuts and Jobs Act of 2017, also known as the “Trump tax cut.” He also wants taxes to be abolished tips, overtimeAnd Social Security benefitsIn addition to the construction car interest payments are tax deductible.

Keeping income tax cuts alone in the TCJA could mean a tax cut of just over $1,000 for the middle 20% of Americans, according to an analysis by the left-leaning Institute on Taxation and Economic Policy.

But another piece of Trump’s tax policy – his plan to impose universal tariffs on all imports from the US – could weaken this positive effect. Economic analyzes found that these tariffs could offset tax benefits and then some for low-income Americans.

The Institute on Taxation and Economic Policy says that if we factor in the cost of tariffs, Trump’s tax package could lead to higher tax bills for everyone except the top 5 percent to create.

“Many of these tariffs hurt low-income families and taxpayers who buy goods abroad,” said Garrett Watson, senior policy analyst at the right-wing Tax Foundation.

You have Harris recommended He wants to restore and expand an expanded earned income tax credit targeted at low-income earners and a more generous child tax credit similar to the one implemented under Biden’s pandemic relief bill in 2021. Tax Policy Center estimates He said Harris’ proposals could cut household taxes by an average of $750, and that the lowest earners would see their after-tax income increase the most.

Harris’s and Trump’s proposals share some key similarities: Both have proposed some version of repealing tip taxes. While Harris did not specify specifically what she would protect from the TCJA, she kept Biden’s promise not to raise taxes on those making under $400,000. Trump’s campaign also showed interest in supporting child tax credit.

high income earners

If Trump makes all income tax provisions of the TCJA permanent, middle-income Americans would get a tax cut of about $1,000, while the top 0.1% of earners would see a cut of about $280,000. Tax Policy Center analysis to create.

Another boon for wealthy Americans would be an extension of the property tax cut. TCJA doubled Amount of inherited wealth that can be considered tax-free, approximately $5.5 million in 2017 $11.2 million in 2018.

Trump has floating The 2017 tax bill eliminated the $10,000 cap on the State and Local Tax deduction, known as SALT. SALT mostly affects the wealthy Benjamin Page, a senior expert at Urban-Brookings Tax, said eliminating the cap and taxpayers in blue states with high local taxes would restore the tax break enjoyed mostly by high-income earners in places like California, New Jersey and New York. Policy Center.

Harris’ tax proposals target higher income earners to help offset costs; if the TCJA expires for taxpayers with income over $400,000, the upper marginal rate 37% to 39.6%. He also supports two measures that have gained traction during the Biden administration: targeting capital gains of ultra-wealthy investors and imposing a minimum income tax on billionaires.

“Unlike the Trump campaign, the Harris-Walz campaign’s other shoe is coming in at the top level,” said Ernie Tedeschi, economics director at the Yale Budget Lab and former chief economist for the White House Council of Economic Advisers.

Harris proposes tax hike capital gains From 20% to 28% for Americans earning $1 million or more. That means a higher tax rate on the money wealthy Americans make when they sell assets like real estate or stocks. main source of income for wealthier taxpayers.

Harris also supports a minimum income tax for billionaires. Biden made a splash. He did not reveal details of what that would look like.

Large and small business owners

Harris wants to raise corporate tax rate 21% to 28%Trump suggested lowering this rate 21% to 15% For companies that manufacture their products in the USA.

You have Harris recommended some special breaks for small businesses. His main recommendations include increasing the startup deduction for new businesses from $5,000 to $50,000, creating a standard deduction for small businesses and encouraging local governments to ease red tape. eliminate It makes it easier to recognize credentials across states, along with barriers to licensing.

“A lot of startups can deduct the cost of those startup expenses more quickly and more comprehensively, which could at least encourage a little bit more startup activity at that margin,” Watson said.

Tedeschi, meanwhile, said Trump’s tariffs could weigh on small businesses. Importers may have to choose between raising prices or covering the cost with lower margins.

But Tedeschi said both candidates’ proposals to repeal tip taxes could ultimately be a boon for small businesses.

“Employers will be able to pay a little less for these jobs, given the demand,” he said. “Tipped workers will probably end up well because, again, their tips are tax-free.”

Trump’s offer Eliminate taxes on overtime pay It can also benefit small businesses by allowing them to restructure employees’ schedules and payment methods.

One question mark for both campaigns is the TCJA provision that allows some business owners to deduct business income from their taxable income. A Senate Finance Committee aide told BI that Democrats in Congress hope to keep the deduction for business owners earning under $400,000 but change it for those above that threshold.