Many Key Provisions of the Tax Cuts and Jobs Act will Expire Soon. Here’s why it matters during the 2024 Election Cycle
By Gabriella Cruz-Martinez – Kiplinger Report – September 2024
Whether Vice President Kamala Harris or former President Donald Trump makes it to the Oval Office, either one will have to address the looming “tax cliff” tied to the Tax Cuts and Jobs Act (TCJA) — as many provisions are slated to sunset at the end of 2025.
Without action from Congress, the impact could be widespread — ending tax cuts from low and middle-income families to the ultra-wealthy. With the 2024 election fast approaching, and swing states still up for grabs, all eyes will be on Harris and Trump’s developing tax agendas.
Here’s a look at where both candidates stand on key TCJA expiration issues.
TCJA expiration: Income tax rate
The TCJA, also known by some as the “Trump tax cuts,” temporarily lowered marginal rates for most individual federal tax brackets. The highest federal income tax rate was reduced to 37% until 2025, after which it will revert to 39.6%.
What candidates are saying:
Harris sticks to Biden’s FY25 tax proposal
Vice President Harris has committed to President Biden’s position not to raise taxes on those earning less than $400,000 a year. The Democratic presidential nominee would also likely let the highest marginal income tax rate for the top 1% of earners revert from its current 37% rate to 39.6%.
At the same time, though the TCJA did not directly change the Medicare tax rate, Biden’s FY25 budget proposal, which Harris generally supports, calls for increasing the rate from 3.8% to 5% for those earning more than $400,000 a year.
Harris could potentially support taxing investment earnings for those earning $1 million or more annually as regular income rather than at lower capital gains tax rates.
Trump hasn’t committed to a plan but floated replacing federal income tax with tariffs
Former President Trump wants to raise tariffs on all foreign goods. The Republican presidential nominee has pitched a blanket 20% tax on all imported goods entering the U.S., and a 60% tax on goods imported from China.