2024 Election Tax Policies You MUST Know

Hey everyone, Phil Clark here, host of We're Talking Money, where we try to help you make smarter financial decisions every day. Today we're diving into a hot topic: how the upcoming 2024 presidential election could affect your taxes.

If you're like most Americans, me included, you're paying close attention to what the 2024 candidates for the presidential election are saying about their tax policies. They play a huge role in shaping your financial future. This election season, it's probably one of the most important subjects.

The 2017 Tax Cuts and Jobs Act, the TCJA, which was created during Trump's first term, they're set to expire at the end of 20125. Now, one of the biggest questions from voters is whether key provisions from TCJA will be extended or will they expire at the end of 2025. Remember, this tax act lowered individual rates, it expanded the tax brackets, and it raised the estate tax exemption. That was a huge win, but these changes were not permanent.

Let's break down what the two major candidates are proposing. Kamala Harris, the sitting vice president, she is likely to be following in the footsteps of the current administration, that is President Biden's plans. Trump's Tax Act from 2017, she is saying that she'll let those provisions expire for households making more than $400,000 per year. She says she will extend some of the tax cuts, but only to the extent that it affects the middle and lower income Americans. She hasn't explained what that means, however. She's also supportive of expanding the child tax credit to $6,000 and potentially raising Social Security taxes on those higher income earners.

Now, on the flip side, Donald Trump wants to extend his TCJA. He doesn't really want to make any changes to that, but he will add some things. This would keep income tax rates at their current levels, and he's even talking about eliminating taxes on Social Security benefits altogether. That's something everyone who pays into Social Security should keep in mind.

He's mentioned lowering corporate tax rates to 15% and imposing tariffs to fund those tax cuts. Keep in mind, the corporate taxes were lowered under Trump's first term to now 20ish per, and now he wants to take that to 15. Why? This would allow domestic companies to save huge amounts of money, drive down their cost, and that would make American goods more affordable, which would help offset any tariffs that he plans to put in place. It will attract more businesses to come back to America or to want to come to America for the first time to do business. A lot of this Trump was able to accomplish in his first term, so I am not going to doubt him if he wins a second term.

So what does all this mean for you as it relates to your taxes and your wallet? Let's take a look at the key areas that both of these candidates are focusing on.

So number one, it's income taxes. We've touched on it, but let's dig a little deeper. Kamala Harris is likely to increase the top marginal rate to close to 40%, and that's for those high income earners. Trump would keep the current rate where it is; that's 37% for the top rate. Now, if you're making less than $400,000 per year as a household, Harris's plan could offer some tax relief, but she's been unclear on what that might look like. Her inflationary policies, however, in our opinion, could quickly offset any tax savings.

Next is capital gains and dividends: how are they taxed? So Kamala Harris says that she would be pushing for changing that part of the tax code, making long-term capital gains taxed at ordinary income rates for those high income earners. Trump, on the other hand, would be pushing for reducing the top rate to just 15%. Today we know it's 20%, and you then pay your state tax on top of that, and there's the 3.8% net investment income tax. Now, if you're not familiar with the net investment income tax, you can check out our video on this subject. If you're an investor, reducing the capital gains tax, that could create a much better outcome for your money.

And then number three is the estate tax. Now, this one has been in the headlines lately. A lot of people have been planning for this without any action. The current estate tax sits around 50% if you go over the current estate tax exemption, which is currently $1 13.6 million per person. If Kamala Harris were to win and allow TCJA to expire, that amount would drop to about half of the 13.6 million. Then Harris and fellow Democrats, particularly Elizabeth Warren, they're already floating a bill that would lower the exemption to just $3.5 million. That means that millions of households would be affected within two years.

President Trump, on the other hand, will be extending the higher exemption. In fact, when Trump raised that exemption with TCJA in 2017, he wanted to make it permanent. Now, we should all appreciate that. After all, if you're one of those families that has built wealth, you've done it without the assistance of the US government. Why does the US government have any right to tax up to 50% of their wealth? You pay tax on it as you earn it, you pay tax on everything that you purchase, you pay tax on everything that you own. You're simply trying to transfer it to the next generation. I don't believe the government deserves any of your hard-earned wealth. The taxes seem to be getting a little out of control.

Now let's talk about the child tax credit. Now, both candidates seem to be somewhat harmonious about this one, but the amounts are different. Harris seems to be showing much stronger support for growing this credit. She wants to take it to $6,000 versus Trump's $2,000. Now, that larger amount is basically what we saw during the COVID pandemic. Always the question: who's going to pay for it?

Point number five, it's Social Security taxes. Now, as I mentioned, Harris is lobbying for higher Social Security taxes on higher earners, while Trump has been campaigning very hard on eliminating taxes on Social Security benefits altogether. And that's probably a good thing in the eyes of most anyone that's an American. Now, this issue has been debated for many years. I tend to like eliminating the tax, since the very way we get Social Security is taxes that we pay during all of our working years.

What should you do now? You need to stay informed. You can do that by subscribing to our channel. We'll be talking over the next several weeks about various things that these candidates will likely bring to the table. They impact your finances, you're going to need to know about them, and chances are something will change as it relates to your wallet. My suggestion is vote for the candidate that you believe will help you build a better financial house.

Everyone's financial situation is unique, and it's crucial that your strategy be tailored to how you want to live now and in the future. Talk to your financial advisor if you have one, or you can give us a call at OmniStar St to make sure that you're ready for whatever happens in 2024.

Now, if you found this video helpful, don't forget to like, subscribe, and ring that bell for more updates on how you can make the most of your money. Until next time, I'm Phil Clark, and We're Talking Money.