I’m an Economist: 4 Financial Moves You Should Make Before 2025 If Harris Wins the Election
Written by
Kerra Bolton
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Zuri Anderson
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Economic experts are predicting key shifts in financial policy that could affect your wallet and savings in this year’s tight presidential race between Vice President Kamala Harris and former President Donald Trump.
“Under a Kamala Harris administration, it is likely that there will be an increase in taxes for high-income individuals and corporations to fund programs such as universal healthcare and education reform,” said Michael Collins, a chartered financial analyst (CFA) and founder and CEO of WinCap Financial.
“This could include raising the top individual tax rate, increasing capital gains taxes and implementing a wealth tax on net worth over a certain threshold.”
Here are the four financial moves Collins and other economic experts said you should make before 2025 if Harris wins the election.
Adjust for Higher Tax Rates
If the Tax Cuts and Jobs Act (TCJA) is allowed to expire next year, expect a higher marginal tax rate and a lower standard deduction.
“If the TCJA isn’t extended, the standard deduction will fall to about $8,300 for single filers and $16,600 for couples filing jointly,” said Bill Harris, co-founding CEO of PayPal and founder of Personal Capital. “For someone in the highest bracket, this difference could cost as much as $5,000.”
Harris recommended itemizing if you have large charitable contributions, mortgage interest or state and local taxes. You can deduct:
- Charitable contributions of up to 50% of your taxable income
- Mortgage interest on loans up to $1 million, or a $60,000 deduction at 6% interest
- State and local income and property tax payments with no upper cap.
Maximize Retirement Contributions
Collins recommended minimizing your tax burden by taking advantage of tax deductions and credits and considering charitable giving strategies.
“For the majority of people, retirement savings will not need to change much with a Harris victory,” Collins said.
“However, because Harris might increase taxes on wealthy individuals if she wins, these individuals may want to consider maxing out their contributions before any potential changes take effect.”
Review Your Estate Strategy
If Vice President Harris is elected, it could mean a lower estate tax exemption or a higher estate tax rate for high-income individuals and families.
“To prepare for these changes, they may want to review their estate planning strategies and potentially make adjustments to reduce their exposure to these taxes,” Collins said.
Specifically, if the TCJA isn’t extended, the federal estate tax exclusion in 2026 will decrease from about $14 million to about $7 million, depending on inflation adjustments in the interim, Bill Harris said.
“Because the assets (and the exclusion) can be passed to a surviving spouse tax-free, the combined difference can amount to $28 million in 2026 versus $14 million today,” he added.
Bill Harris estimated that the additional tax on people with large estates could be as much as $5.6 million ($28 million minus $14 million times 40%).
“Today’s $14 million exclusion amount ($28 million for couples) is actually part of the ‘unified tax credit’ for estate and gifting,” he explained.
“Rather than losing the benefit of the $7 million to $14 million exclusion that may disappear in 2026, you can use it this year or next to make tax-free gifts to family members or others without incurring a tax on the gifts. This will decrease the size of your estate and reduce the eventual estate taxes.”
Diversify Your Portfolio
The president can influence the financial markets to the extent their administration favors some industries over others. For example, Harris expressed a preference for alternative energy over fossil fuels.
“The industries favored by the administration will be provided with financial tailwinds while disfavored sectors will face financial headwinds,” said Wayne Winegarden, an economist at the Pacific Research Institute. “In this environment, political considerations will have an outsized impact on financial performance.”
Mitigate potential risks by diversifying your investment portfolio across different industries and sectors.
“Additionally, it may be wise to focus on investing in companies that have strong fundamentals and will be able to withstand the impact of increased regulations,” Collins added.
Bill Harris recommended migrating your taxable portfolio from interest-generating bonds toward stocks.
“They generate dividends and capital gains, which carry a lower maximum federal tax rate of only 20%,” he said. “Capital gains are not taxable until you decide to sell your stock, so you control the timing of any taxes.”
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 I’m a Financial Advisor: 4 Moves I’ll Make If I Think Trump Will Win the Election.
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