Tax is taking center stage in the presidential campaign, particularly given the recent debate between the Republican nominee former President Donald Trump, and Vice President Kamala Harris, the Democratic nominee.
With the November 5 election less than 60 days away, Harris has, in recent weeks, unveiled her policy platform. The economic plan contains several proposed tax breaks to address various economic challenges many families and businesses face in the United States.
Harris calls her vision an “opportunity economy.” This “means having enough not just to get by but to get ahead, to be able to build a business, to own a home, to start a family, and to create intergenerational wealth," Harris recently told supporters.
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Tax credits so far appear to be a key part of Harris’ vision. Tax deductions and credits can lower your tax burden, allowing you to keep more of your hard-earned money.
For some, tax breaks help free up funds for essential expenses and savings or investments in things like education and homeownership.
So, here's more of what you need to know.
Related: Kamala Harris Calls for 28% Capital Gains Tax Rate
Kamala Harris tax credits
The following summary highlights tax credits that are part of the Harris campaign platform for the fast-approaching 2024 election.
1. Small business tax deduction: $50,000
Vice President Harris recently unveiled a vision for a new small business tax break during a campaign event in New Hampshire.
"It's essentially a tax cut for starting a small business," the Democratic nominee told supporters.
During the September presidential debate, Harris said small businesses are one of her passions. "My mother raised my sister and me but there was a woman who helped raise us. We call her our second mother. She was a small business owner. I love our small businesses... knowing they are part of the backbone of America's economy."
This proposed increased tax deduction would increase the federal incentive for small business startup expenses to $50,000. New business owners can generally deduct up to $5,000 of their first-year qualifying startup costs.
- The existing tax deduction applies to qualifying costs incurred before the business begins operations, like market research, advertising, employee training, and legal fees.
- The tax break is reduced if total startup costs exceed $50,000 and completely phased out if costs exceed $55,000.
- Startup expenses beyond the initial deduction can be amortized over 180 months (15 years).
In any case, the deduction is designed to help offset some of the initial costs associated with starting a new business. Data from the e-commerce platform Shopify show the average cost of starting a new small business in the U.S. is around $40,000 in the first full year.
Harris’ proposal would reportedly allow businesses to wait to claim the deduction when they turn a profit.
The Vice President has also mentioned wanting to "cut red tape," suggesting a standard deduction of sorts for small businesses, designed to simplify the tax-filing process.
2. Child tax credit expansion
As Kiplinger has reported, Vice President Harris, if elected, wants to expand the federal Child Tax Credit (CTC). Harris' child tax proposal would reinstate the expanded CTC temporarily implemented during the pandemic, which provided up to $3,600 per child under six years old and $3,000 for older children.
The current CTC for the 2024 tax year is up to $2,000 per eligible child.
- Data indicate that a CTC expansion like this could (as it did during the pandemic) reduce child poverty rates and provide notable support to middle-class families.
- However, the Tax Foundation estimates that the 10-year cost could reach $1.6 trillion.
It’s also worth noting that Harris has called for expanding the Earned Income Tax Credit (EITC) for those with lower incomes who don't have a child in the household. The EITC is an existing credit designed to benefit workers and families with low-to-moderate incomes.
For 2024, for workers without qualifying children, the maximum credit is $600 subject to income limits. Harris has proposed increasing that maximum to about $1,500. She would also likely want to raise the income limit and broaden eligibility criteria.
3. $6,000 child tax credit
Separately, Harris has proposed a tax boost for families with newborns.
During a recent campaign rally, Harris described the first year of a child’s life as a “vital year of critical development,” adding, "And the cost can really add up, especially for young parents who need to buy diapers and clothes and a car seat and so much else."
Under her proposal, parents of newborns would receive an up to $6,000 tax credit in their child's first year. Harris has said this recognizes the significant expenses associated with welcoming a new child into a family.
"We know that young families need support to raise their children," Harris added during the first presidential debate.
4. Housing tax credits
VP Harris has also proposed several tax credit proposals to address housing affordability.
"We know that we have a shortage of homes and housing, and the cost of housing is too expensive for far too many people," Harris said on September 10.
Home prices and rents have risen faster than incomes in many areas of the country. So more people spend most of their earnings on housing while others are priced out of the market.
- First-Time Homebuyer Credit: A $10,000 tax credit for first-time homebuyers, coupled with downpayment assistance of up to $25,000 for all eligible first-time homebuyers
- Starter Home Construction Credit: An unspecified tax credit for homebuilders of "starter" homes sold to first-time homebuyers to increase the supply of affordable housing
- Low-Income Housing Tax Credit Enhancement: Harris proposes to strengthen this existing credit to encourage the development of affordable rental housing
- Neighborhood Homes Tax Credit: This previously proposed credit would provide a tax incentive for rehabilitating certain homes in distressed areas
5. Premium tax credit
While not a new credit, Harris has proposed an extension of the enhanced Affordable Care Act (ACA) Premium Tax Credit (PTC). This could continue to make health insurance more affordable for some who purchase coverage through the ACA marketplaces. The Harris-Walz campaign says some could save on average $800 a year on their Affordable Care Act health insurance premiums.
The current PTC subsidies and several other key provisions from the 2017 Tax Cuts and Jobs Act (TCJA), involving income tax rates, the standard deduction, and lifetime gift and estate tax exemption, are set to expire at the end of 2025, if Congress doesn't act.
For more information about the TCJA sunset, see Kiplinger's report: How Trump and Harris Might Handle the TCJA Tax Cuts.
Trump tax cuts
Donald Trump’s latest tax proposals would essentially build on his previous tax cuts from the TCJA. He has floated further reducing individual income tax rates and his running mate, Sen. JD Vance has suggested expanding the child tax credit to $5,000.
Trump has said he would increase tariffs to pay for these and other likely tax breaks for corporations. At a recent economic luncheon in New York, the former President recently pitched the controversial idea of a universal 10-20% tariff on all imports.
As Kiplinger has reported, critics warn that tariffs are effectively taxes and Trump's tariff plan could lead to higher prices for consumers.
Kamala Harris tax plan
Harris' tax credit proposals are part of an economic plan designed to support middle-class households. Another tax proposal in the Harris plan targeted to lower and middle-income earners is eliminating federal taxes on tips in conjunction with a minimum wage increase and other safeguards.
Republican nominee, former President Donald Trump has also proposed eliminating federal tax on tips and overtime pay, and most suspect he will support reducing the corporate tax rate.
Of course, Harris or Trump would have to win the presidential election and have a favorable balance of power in Congress to enact any such proposals.
Who won the debate?
Still, having information on potential policy proposals from both presidential candidates might help inform your vote. So, you may have tuned into Tuesday's presidential debate featuring Trump and Harris with nearly 70 million viewers.
Over the next few days, there will surely be a lot of discussion over who won. Whichever way you decide, stay informed and keep an eye on existing tax credits and deductions that can help lower your next tax bill.
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