2024 Election and Taxes

Let’s face it…No one wants to talk politics these days, but facts are facts. We are approaching a presidential election, so politics need to be top of mind.

As we dive in, I will give you peace of mind though. We are not going to provide any biased content and we are going to keep the topic narrowed down to one thing - taxes.

So, what is the current tax proposal of each candidate?

Let’s start with where we are today. We are nearing the end of the 2016 Tax Reform enacted by Congress under President Trump. Obviously, President Trump is a supporter of extending this. In fact, he wants to make it permanent.

From the perspective of the families we serve, there are a few critical points to make here if this is extended or made permanent:

1. The potential Qualified Business Income Deduction of 20% remains in place.

2. Expanded tax brackets, lower tax rates, and higher standard deductions remain in place.

*** On this note, most of the families we serve incurred lower income taxes after tax reform, but not all. There were a few high W-2 earners and a few others with high property tax or state income tax that incurred higher taxes. ***

1. The top income tax rate would remain at 37%.

2. The estate and gift tax exemption amounts remain at $13.61 million per person (27.22 per couple) and adjusted each year for inflation.

3. The corporate tax rate would remain at 21% unless President Trump is able to get his wish of dropping this again. In that case it would be 20%.

There are a few other notable items in President Trump’s current proposal:

1. No tax on tips.

2. No tax to workers produced by overtime.

3. U.S. tariffs on all U.S. imports.

4. Increased tariffs on China imports.

Now, let’s move on to Vice President Harris’ proposal:

1. Let the Tax Reform created by the Tax Cuts and Jobs Act expire, which negates those items mentioned above if it were extended or made permanent.

2. Increase the corporate income tax rate to 28% and the alternative minimum tax for corporations to 21%.

3. Make the excess business loss limitation for pass-through entities enacted in 2021 permanent (losses capped at $289,000).

4. The top income tax rate would be raised to 39.6 for incomes above $400,000.

5. Capital gains tax (including qualified dividends) would be taxed as much as 28% for taxable income over 1 million.

6. Expand the Net Investment Income Tax from 3.8% to 5% on income above $400,000.

7. Limit 1031 like-kind exchanges to $500,000 in gains.

8. Tax unrealized capital gains at death above a $5 million exemption.

9. The estate and gift tax exemption amounts would revert to the pre-2017 figure of roughly 6 to 7 million per person depending on inflation and tighten rules further.

10. Add additional tax incentives:

    1. No tax on tips.

    2. Incentives for affordable housing builders.

    3. Tax credits for first-time home buyers ($25,000 over four years).

    4. Make the current child tax credit permanent and increase the amount for newborns to $6,000 in the first year.

    5. Permanently extend the earned income tax credit expansion for workers without qualifying children.

    6. Expand the Section 195 deduction limit from $5,000 to $50,000 for start-up businesses.

The Tax Foundation provides awesome literature and updates to the candidates’ proposals. You can find these HERE. No matter what your political views are, it’s important that you get out and vote. Happy reading and…voting!