Hold onto your W-2s! The 2024 election could shake up your tax refund faster than you can say “1040-EZ.” With Kamala Harris potentially taking the Oval Office, many Americans are wondering if their refund checks will be getting fatter or slimmer.
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GOBankingRates spoke with financial experts to get the lowdown on what your wallet might expect.
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If you’re hoping for a dramatically different tax season in 2025, you might want to temper those expectations. Thomas J. Brock, CFA, CPA, with over 20 years of financial experience and an expert at Annuity.org, doesn’t see any earth-shattering changes on the immediate horizon.
“I do not expect tax refunds for the 2024 or 2025 tax years to change substantially if Kamala Harris is elected,” Brock said.
But before you breathe that sigh of relief (or disappointment), Brock warns that the real changes could be lurking just around the corner.
“With Kamala in office, you could see your refund shrink beyond 2025,” he cautioned. “This is because many of the features of the Tax Cuts and Jobs Act of 2017 are expiring at the end of 2025.”
In other words, those tax breaks you’ve been enjoying? They might be heading for the sunset, and Harris might not be rushing to extend them.
If your paycheck has a few more zeros than most, a Harris presidency could mean it’s time to loosen those purse strings. Aaron Cirksena, CEO and founder of MDRN Capital, thinks Harris might follow in Biden’s footsteps when it comes to tax policy.
“With Harris backing Biden’s favor of tax hikes, it is likely that income taxes for businesses and high earners will go up,” Cirksena said. “If we go off of Biden’s tax proposal, the income tax rate would increase to 39.6% for those making $400,000 or more. That alone would significantly reduce the amount of money returned.”
So, if you’re in that $400K+ club, you might want to start preparing for a potentially smaller refund check.
If you’re on the other end of the income spectrum, Harris’ tax policies might he helpful. Cirksena points out a potential bright spot in Harris’s tax philosophy.
“On the other hand, Harris has previously supported the EITC, which is aimed at creating a tax break for lower income,” he shared.
The Earned Income Tax Credit (EITC) is designed to give a financial boost to low to moderate-income workers. If Harris pushes for an expansion of this credit, it could mean bigger refunds for anyone who qualifies.
While not directly related to income taxes, changes to Social Security could impact your overall financial picture. Paul Tyler, CMO at Nassau Financial Group, reminds us of the elephant in the room.
“Basic economics unfortunately won’t change regardless of who wins the presidential elections,” Tyler said. “With the two Social Security Trust Funds running out of money, the government will either need to raise taxes or reduce benefits to keep Social Security solvent.”
Tyler predicts that Congress will likely do both, which means your tax burden and retirement benefits could both be affected, regardless of who’s in the White House.
With all this uncertainty swirling around, Tyler suggests taking matters into your own hands when it comes to retirement and estate planning.
“It’s now more important than ever to take your retirement and estate plans into your own hands,” he advised. “If you haven’t already, talk to your financial advisor about the best ways to maximize ways to self-fund your long term care and pass something on to your heirs.”
Tyler recommends considering financial products that can provide stability and protection:
“Annuities can be remarkable safe harbors for nest eggs, guaranteed income when you need it, and provide a death benefit for your survivors,” he said. “Life insurance, taken even at a late age, can provide strong protection as well to protect your legacy.”
Remember, tax laws are as changeable as the weather in April. Your best bet? Keep an eye on the IRS and consider consulting with a financial advisor to make sure your tax strategy is where it needs to be.
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. For more coverage on this topic, please check out: Trump Wants To Eliminate Income Taxes: Here’s What That Would Mean for the Economy and Your Wallet.
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