Accounting
Taxes, tariffs and more: 5 key economic stakes of the US election
The U.S. election on Tuesday will have far-reaching economic consequences, ranging from how Americans are taxed to how the country trades with the rest of the globe.
Democrat Kamala Harris and Republican Donald Trump present starkly different policy visions that will also shape the flow of immigrants into the labor market and make-up of the energy supply that powers industry. Their differences will influence the prices consumers pay for everyday goods and the borrowing costs households and businesses face on debts.
Much will depend not only on who wins the White House but also which party controls Congress. That’s especially so for tax proposals, which must be approved by lawmakers. Still, the president has independent authority to take sweeping actions, particularly on trade and immigration.
Stephen Maturen/Getty Images and/Photographer: Stephen Maturen/Ge
Here’s a look at five of the most significant economic impacts of the election outcome.
Taxes
Trump has put lowering income taxes front and center of his campaign. He’s promised to extend tax cuts passed during his first term — otherwise set to expire at the end of next year — and also further reduce corporate income taxes. On the campaign trail, he’s embraced additional ideas for tax cuts, including ending taxation of tips, overtime pay and Social Security benefits. He claims the revenue loss would be partially offset with new tariffs on imported goods.
Harris has only committed to extending the 2017 Trump tax cuts for those earning less than $400,000 and says she would roll back the expiring tax cuts for the richest Americans. She has pledged to raise the corporate income tax rate and impose a minimum tax for billionaires. She would expand child tax credits for families and offer breaks for smaller businesses.
The impending expiration of the 2017 tax cuts likely forces action on tax legislation next year. Neither party wants to take responsibility for tax increases on the middle class, so tax policy will dominate Congress in the next session.
The make-up of Congress will be critical to the outcome. An election sweep in which the same party wins control of the presidency, Senate and House would clear the way for a partisan plan. But divided government would force a negotiated deal.
Trade
The biggest potential shock to business would come from Trump’s plan to sharply raise tariffs to try to force manufacturers to move production to the US. The Republican has called for minimum tariffs between 10% to 20% on all imported goods, rising to 60% or higher on imports from China.
Bloomberg Economics projects the maximal version of the plan, with the across-the-board tariff at 20%, would lower US GDP by 0.8% and add 4.3% to inflation by 2028 if China alone retaliates. If the rest of the world also retaliates, the blow to growth would be greater, lowering US GDP by 1.3%, but would add just 0.5% to inflation because of the weakened US economy.
Harris has signaled broad continuity with the trade policies of the Biden administration and also has warned Trump’s proposals would amount to a “national sales tax” on consumers.
Both candidates have said they would block a proposed Japanese takeover of United States Steel Corp., signaling a consensus on a hawkish attitude to foreign investment in sensitive sectors. The president has considerable unilateral authority to act on trade policy.
Immigration
Trump has promised the biggest deportation of unauthorized migrants in history, a move that would immediately hit sectors such as construction, hospitality and retail that rely heavily on immigrants — with both legal and illegal status in the country. Economists say such a move would jolt the labor market, disrupt business and cost billions of dollars to carry out.
Harris would take much more modest steps. She promised to re-introduce legislation clamping down on illegal border crossings, a policy that would require bipartisan support in the event of a divided Congress after the election. The president has wide-ranging powers on immigration.
Energy
Trump has adopted the motto “drill, baby, drill.” He promises to cut down on regulation of oil, natural gas and coal production and promises to make more federal land available for fossil fuel production, arguing that will bring down costs. The former president also says he will “terminate” Biden administration policies that offer subsidies to boost green energy production.
Harris leans into a clean-energy transition. The vice president has pledged to lower household energy costs but her agenda is committed to tackling the climate crisis through clean energy and protecting public lands.
Deficits
If either candidate has their way, U.S. budget deficits will go up, analysts say, but the jump would be nearly twice as big under Trump. Larger deficits typically mean higher interest rates and borrowing costs, for both households and businesses.
Harris’s campaign plans would increase the deficit by as much as a cumulative $3.95 trillion over a decade while Trump’s would drive up the deficit by as much as $7.75 trillion, according to estimates by the Committee for a Responsible Federal Budget, a nonpartisan fiscal watchdog group.
So far, investors appear sanguine on the outlook for U.S. fiscal policy regardless of who wins. Appetite for purchasing Treasury bonds has held up even as the U.S. annual deficit for the fiscal year ended Sept. 30 rose to $1.83 trillion from $1.7 trillion the previous year.
Still, some analysts warn that an unsustainable fiscal trajectory risks sparking market volatility. U.S. debt is already set to reach 99% of GDP this year. Bloomberg Economics
A divided government, in which the opposition party controls at least one chamber of Congress, could rein in deficits since Congress must approve both spending and taxes.
A group of over 100 lawmakers reintroduced legislation in the House to expand and strengthen the Low Income Housing Tax Credit.
Rep. Darin LaHood, R-Illinois, Suzan DelBene, D-Washington, Claudia Tenney, R-New York, Don Beyer, D-Virginia, Randy Feenstra, R-Iowa, and Jimmy Panetta, D-California, reintroduced the Affordable Housing Credit Improvement Act on Tuesday along with about 100 cosponsors. The bill has been repeatedly reintroduced in Congress since 2016 without winning final passage. A companion bill in the Senate is slated for introduction soon. Last Congress, the Affordable Housing Credit Improvement Act had 273 bipartisan cosponsors in the House of Representatives and 34 in the Senate.
The Affordable Housing Credit Improvement Act would support the financing of an estimated nearly 2 million new affordable homes across the country by increasing the number of credits allocated to each state by 50% for the next two years and making the temporary 12.5% increase secured in 2018 permanent. The credits have already helped build more than 59,000 additional affordable housing units across the U.S.
The bill would also increase the number of affordable housing projects that can be built using private activity bonds, stabilizing the financing for workforce housing projects built using private activity bonds by decreasing the amount of private activity needed to secure LIHTC funding. Proponents believe that as a result, projects would be able to carry less debt, and more projects would be eligible to receive funding.
“As I travel throughout Illinois’ 16th Congressional District, I frequently hear how the shortage of affordable housing impacts our communities throughout central and northwestern Illinois,” LaHood said in a statement. “To address this growing crisis across the country, Congress must strengthen tools to drive investment into affordable workforce housing and expand housing options for hardworking families nationwide. I am proud to reintroduce the bipartisan Affordable Housing Credit Improvement Act alongside Representatives DelBene, Tenney, Beyer, Feenstra, and Panetta to strengthen our communities and support economic development.”
The bill would also improve the LIHTC program to serve communities such as veterans, victims of domestic violence and rural Americans.
“Too many families are struggling to find a safe, affordable place to call home,” said DelBene in a statement. “This is a pervasive problem across America and in Washington. When people have stable housing, it has a ripple effect throughout other aspects of life. They’re better able to support their families and succeed at work. This overwhelmingly bipartisan legislation makes smart, targeted investments to increase affordable housing supply and help meet the needs of growing communities both in Washington and across the country.”
Since it was created in 1986, the LIHTC has helped build or restore more than 3.5 million affordable housing units, nearly 90% of all federally funded affordable housing during that time. Approximately 8 million American households have benefited from the credit, according to proponents, and the economic activity that it generated has supported 5.5 million jobs and generated more than $617 billion in wages.
In the previous Congress, over half the membership of the House cosponsored the AHCIA, including majorities of both Republicans and Democrats. Key provisions from the bill passed the House with overwhelming support as part of the Tax Relief for American Families and Workers Act of 2024 (H.R.7024): restoring the 12.5% expansion of the LIHTC initially signed into law by President Trump (but allowed to expire in 2021), and easing the private activity bond threshold requirements for accessing four percent credits. This year’s reintroduction of the bill comes as communities across the country struggle with higher housing costs and dwindling supply, according to proponents.
“The overwhelming bipartisan support for the Affordable Housing Credit Improvement Act of 2025 underscores the critical need to increase the supply of affordable rental homes,” said Affordable Housing Tax Credit Coalition CEO Emily Cadik in a statement. “We thank the bill’s sponsors for their leadership and the more than 100 bipartisan House cosponsors for supporting this commonsense solution to expand and strengthen the Housing Credit.”
“With our nation’s housing crisis reaching record levels, there is a strong imperative for Congress to act,” said Dudley Benoit, president of the AHTCC board of directors and executive vice president of Walker & Dunlop, in a statement. “The affordable housing crisis affects every state and all types of communities. The Housing Credit has proven to be an effective tool in urban and rural areas alike. Without action, this crisis will continue to spiral, leaving more families unable to find affordable housing in their communities and making it more difficult for those communities to support a workforce.”
Individuals and businesses in about a dozen states that were hit by natural disasters last year will have at least a few extra weeks to file their taxes or ask for an extension beyond April 15.
The IRS said individuals and businesses in areas covered by 2024 disaster declarations that their 2024 federal income tax returns and tax payments for tax year 2024 will be due on Thursday, May 1, 2025. Taxpayers in three more states will get fall deadlines.
The May 1, 2025, deadline applies to taxpayers affected by FEMA disaster declarations issued during 2024. These include areas in nine different states:
- Taxpayers in the entire states of
Alabama ,Florida ,Georgia ,North Carolina andSouth Carolina ; Alaska – The City and Borough of Juneau;New Mexico – Chaves County;Tennessee – Carter, Claiborne, Cocke, Grainger, Greene, Hamblen, Hancock, Hawkins, Jefferson, Johnson, Sevier, Sullivan, Unicoi and Washington counties;Virginia – Albemarle, Appomattox, Bedford, Bland and Botetourt counties; Bristol City; Buchanan, Buckingham, Carroll and Charlotte counties; Covington City; Craig County; Danville City; Dickenson and Floyd counties; Galax City; Giles, Grayson, Greene, Lee, Madison, Montgomery and Nelson counties; Norton City; Patrick, Pittsylvania and Pulaski counties; Radford City; Roanoke City; Roanoke, Russell, Scott, Smyth, Tazewell, Washington, Wise and Wythe counties.
In addition, individuals and businesses in three other states can wait until this fall to file their 2024 returns and pay any taxes due. This includes:
- Oct. 15, 2025, for Los Angeles County in
California , related to the January wildfires. - Nov. 3, 2025, for all of
Kentucky and Boone, Greenbrier, Lincoln, Logan, McDowell, Mercer, Mingo, Monroe, Raleigh, Summers, Wayne and Wyoming counties inWest Virginia .
On top of that, taxpayers who live or have a business in Israel, Gaza or the West Bank, and certain other taxpayers affected by the terrorist attacks in the State of
Anybody who needs a tax-filing extension beyond May 1, 2025, for tax year 2024 can get it, but they have to request the extra time. However, this type of filing extension isn’t an extension of the time to pay the taxes due.
The IRS is urging anyone who needs an extension to request it electronically by April 15, 2025. It’s important to note that disaster-area taxpayers also qualify to request a tax filing extension between April 15 and May 1, 2025, but these requests cannot be filed electronically. They can be filed only on paper using
Whether the request is filed electronically or on paper, the extension will give taxpayers until Oct. 15, 2025, to file their 2024 return. The IRS stressed that tax payments are still due by May 1, 2025. For more details, visit
Eligible returns and payments for automatic extensions include:
- Calendar year 2024 partnership and S Corporation returns normally due on March 17;
- 2024 individual income tax returns and payments normally due on April 15;
- Quarterly estimated tax payments normally due on April 15; and,
- Calendar year 2024 corporate and fiduciary income tax returns and payments normally due on April 15.
Other kinds of tax returns, payments and time-sensitive tax-related actions can also qualify for the extra time. Check the
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