The next president's impact on your taxes: A comparison between Biden and Trump

• The TCJA temporarily lowered taxes for the majority of Americans.
• Many of those tax breaks will expire after 2025 without changes from Congress.
• President Joe Biden plans to extend tax breaks for most Americans, while former President Donald Trump wants to maintain all TCJA provisions.
• There are concerns about funding TCJA extensions due to the federal budget deficit.

The upcoming election could result in the expiration of trillions in tax breaks, potentially leading to an increase in taxes for most Americans after 2025 if Congress does not intervene.

The TCJA temporarily lowered taxes for most Americans with lower federal income brackets, increased the standard deduction, and made the child tax credit more generous, among other provisions.

The 2025 tax cliff is a crucial concern for both presumptive nominees President Joe Biden and former President Donald Trump.

The Trump-era tax cuts are set to expire after 2025, and experts predict a "massive tax cliff" for Biden and Trump. Biden plans to increase taxes on the wealthy and corporations to extend middle-class tax breaks.

Biden plans to maintain tax breaks for low-income taxpayers, while Trump intends to keep all provisions of the TCJA.

According to Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center, 95% of taxpayers share the same desire.

The control of Congress will determine any future legislative updates.

Lower federal income tax brackets

The Tax Foundation's senior policy analyst and modeling manager, Garrett Watson, stated that one expiring TCJA provision is lower federal income tax brackets, which "reduced rates across the board."

The individual rates will increase after 2025, returning to their original percentages of 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.

The fiscal year 2025 budget proposed by Biden includes a 39.6% tax rate for single filers earning over $400,000 and married couples with an annual income above $450,000.

The higher standard deduction led to a sharp decrease in the percentage of filers who itemized.

In 2020, the percentage of tax filers utilizing the standard deduction increased to 90% from 70% in 2017, as per the Tax Policy Center.

If the standard deduction was reverted to its previous level, more filers would be eligible for itemized tax breaks on charitable contributions, medical expenses, state and local taxes, and other deductions.

More generous child tax credit

The child tax credit, which was doubled to $2,000 and boosted to $1,400 under the TCJA, is another provision that will expire in 2024. Some lawmakers have advocated for expanding it in the future.

The child tax credit design has been a subject of debate in Congress, with discussions on the amount, eligibility, and refundability, as stated by Gleckman.

Consumers pay for higher tariffs

The Trump campaign has proposed tariffs, which are taxes on imported goods from other countries, a policy that Biden has also supported.

According to Gleckman, Biden's tariffs on China are similar to Trump's in terms of direction, with some being maintained and new ones introduced in May.

Trump proposes a 10% universal tariff on all U.S. imports and a 60% or higher levy on Chinese goods, while Biden seeks more targeted tariffs.

Watson stated that all evidence suggests that consumers will pay the extra price for tariffs.

Funding extensions amid the budget deficit

With the year 2025 fast approaching, there remain uncertainties about funding the extensions of the TCJA, given the growing federal budget deficit.

The Congressional Budget Office estimates that extending tax breaks under the TCJA could add $4.6 trillion to the deficit over the next ten years.

Lael Brainard, Biden's top economic advisor, has advocated for increasing taxes on the wealthy and corporations to finance middle-class extension programs.

To achieve a fairer tax system, we cannot extend expiring Trump tax cuts for individuals with incomes over $400,000, as she stated in a May speech to The Hamilton Project at the Brookings Institution.

The campaign hasn't specifically addressed plans to fund TCJA extensions, although Trump has proposed tariffs.