Vice President Kamala Harris and former President Donald Trump are both proposing tax changes that would rank among the largest in U.S. history, but their plans would impact very different groups of Americans by providing tax credits and cuts to some taxpayers, while raising taxes on others.
While taxes are always on the ballot during an presidential election, the 2024 race has even more at stake given that many provisions in Trump’s signature tax legislation, the 2017 Tax Cuts & Jobs Act, will expire at the end of 2025. If Trump wins, he’s expected to extend many of those provisions, while Harris has vowed to only keep those that help people earning under $400,000.
At the same time, both candidates have sought to curry favor with some groups of voters by promising specific tax cuts and credits, such as Harris’ plan to introduce a $6,000 Child Tax Credit for parents of newborns. Trump, meanwhile, has dangled a host of tax cuts to everyone from senior citizens (promising to get rid of income taxes on Social Security) to tipped workers (vowing to eliminate taxes on tips).
But Trump is also proposing across-the-board tariffs on all imports, a plan that would effectively act as a sales tax on American consumers. That’s because the countries that manufacture products imported to the U.S. do not pay tariffs; rather, tariffs are added to the prices of imported products that American consumers purchase.
Here’s what to know about how their tax plans stack up.
Would Trump cut or raise your taxes?
Trump’s combination of tariffs and tax cuts — including cutting the corporate tax rate to 15% from its current 21% — would rank as the sixth-biggest tax cut since 1940, according to a recent Tax Foundation analysis.
However, Trump’s tax cuts would require Congressional approval, which could prove to be a hurdle if at least one of the chambers is controlled by Democrats.
If Trump is unable to enact his tax cuts but adds his proposed tariffs — which don’t need a Congressional greenlight — he would instead be introducing the seventh-biggest tax increase since 1940, the Tax Foundation says. That’s because tariffs are essentially sales taxes paid by U.S. consumers, with the typical household paying about $1,700 more each year in additional costs, according to one estimate.
Meanwhile, income taxes would decline under Trump for all income groups, but the biggest beneficiaries would be high-income households, according to the Penn Wharton Budget Model. Their analysis includes Trump’s proposed tax cuts but doesn’t include the impact of tariffs.
Would Harris cut or raise your taxes?
Harris is proposing a mix of tax cuts, tax increases and expanded tax credits that together would rank as the 15th largest tax increase since 1940, according to the Tax Foundation.
However, the impact would be greater on higher-income households, given that she has vowed to not raise taxes on those earning less than $400,000. Her tax increases would also be targeted at businesses, as she wants to boost the corporate tax rate to 28% from its current 21%.
Most low- and middle-income households would actually get a tax break under her proposals, but high-income households would pay substantially more in income taxes than they currently do, according to the Penn Wharton Budget Model.
The top 0.1%, or those earning more than $14 million a year, would see their taxes increase by about $167,000 a year.
What are Harris and Trump proposing for families?
Harris wants to expand the Child Tax Credit from its current $2,000 to $6,000 for children up to a year old, $3,600 for kids between 1 to 6, and $3,000 for those between 6 to 17.
Low-income households with kids would receive an additional $2,750 on average from Harris’ expanded CTC, according to a Tax Policy Center analysis.
Meanwhile, Trump’s vice presidential candidate, JD Vance, has floated the idea of a $5,000 CTC, but the campaign hasn’t introduced more details, according to the Tax Policy Center. If Trump extends the TCJA, the CTC would remain at $2,000 per eligible child.
What are Harris and Trump’s plans for taxes on Social Security?
Harris hasn’t proposed any tax cuts for Social Security beneficiaries, while Trump has floated eliminating federal income taxes on the retirement payments.
Trump’s plan would mostly help middle- and high-income retirees, given that low-income retirees often don’t make enough to pay federal income tax on their benefits, according to tax experts. The biggest boost would go to retirees earning between $63,000 and $200,000, the Tax Policy Center estimates.
At the same time, Trump’s tax cut would likely hasten the insolvency of the Social Security trust fund, which relies on those income taxes for funding, according to the nonpartisan Committee for a Responsible Federal Budget. Retirees would also be facing a bigger benefit cut, up to 33% of their monthly checks rather than the 23% currently forecast, when the trust fund is exhausted, the group estimates.
What are Harris and Trump’s plans for business taxes?
Harris wants to raise the corporate tax rate to 28% from its current 21%.
By comparison, Trump wants to cut the corporate tax rate to 15% from its current 21%.
“Nowhere do the candidates’ tax plans differ more,” noted Howard Gleckman, senior fellow of the Tax Policy Center, in a November 1 blog post.
What are Harris and Trump’s plans for taxes on overtime and tips?
One place where the candidates converge is on cutting taxes for people who work for tips. Both have portrayed the idea as helping workers with families.
But Trump is also proposing other tax cuts for workers, such as a plan to get rid of federal income taxes on overtime income.
What other tax changes are Harris and Trump proposing?
Harris wants to help people buy homes and start businesses by creating a new $25,000 first-time homebuyers credit and expanding the deduction for startup business expenses from $5,000 to $50,000.
Trump has also proposed making the interest for auto loans tax deductible, a move that would primarily help higher-income taxpayers who itemize their deductions.
