Democrats and Republicans say their tax plans would put more money in household pockets. The November 3 midterm election will decide which party controls each chamber of Congress. The party that gains a majority could shape future tax law, but legislation would still require President Donald Trump’s signature until the end of his term. Democrats have proposed a larger child tax credit and higher taxes on top earners and corporations. Republicans want to keep current rates and extend the tips and overtime deductions set to expire after 2028.
A financial advisor can help you review how potential changes after the midterm election could affect your tax strategy and retirement plan.
What Democrats Are Promising
There is no single official Democratic tax plan for the midterms. House Democratic leader Hakeem Jeffries has said that if Democrats win the House, they will be united on reinstating the Affordable Care Act (ACA) tax credits and undoing President Trump’s tariffs. 1 The House Democratic leader maintains that tariffs “have increased costs on everyday Americans” by thousands of dollars annually. 2 The House passed a three-year extension of the expired ACA credits in January. 3
The most detailed tax plan from a Democrat on the 2026 ballot comes from Sen. Cory Booker of New Jersey, who is running for reelection. 4 His Keep Your Pay Act would raise the standard deduction to $37,500 for single filers, $56,250 for heads of the household and $75,000 for married couples. 5 Those amounts are currently $16,100, $24,150 and $32,200. 6
Booker’s plan would also expand the earned income tax credit and make the child tax credit fully refundable. 7 The child credit would go up to $4,320 for children under 6 and $3,600 for ages 6 to 17, plus a $2,400 “baby bonus” in the year a child is born. A family with children ages 4 and 8 could qualify for up to $7,920 ($4,320 + $3,600). Current law caps the credit at $2,200 per child, or $4,400 for two children, so the proposal would be worth up to $3,520 more before phaseouts ($7,920 − $4,400). 8
To help pay for it, the bill would raise the top two income tax rates from 35% and 37% to 41% and 43%. Booker has also called for a higher corporate tax rate and a larger tax on stock buybacks, without specifying new rates. 9
The table below summarizes the main Democratic tax proposals and what they could mean for households:
| Proposal | Who Is Promising It | What It Could Mean for Households | Status |
|---|---|---|---|
| Reinstate ACA tax credits | House Democrats | Lower premiums for people who buy marketplace coverage | Passed the House in January 2026 |
| Undo Trump’s tariffs | House Democrats | Lower prices on imported goods | Planned if Democrats win the House |
| Keep Your Pay Act | Sen. Cory Booker | Larger standard deduction and child credit, with higher rates for the top two brackets | Introduced March 10, 2026; referred to Senate Finance |
What Republicans Are Promising
Republicans are campaigning largely on tax cuts they enacted in 2025. House Speaker Mike Johnson has said that if Republicans keep power, they will continue with an agenda focused on cutting taxes and federal spending. 10 Some Republican House candidates, including Chris Shea in Connecticut’s 5th District, have said they want the law’s tax breaks strengthened or made permanent. 11
The Treasury Department has estimated that the Working Families Tax Cuts would produce an average tax cut of $3,750 per filer in 2026, although your actual benefit could differ substantially. 12 The law also made the individual tax rates permanent and increased the standard deduction. 13
The table below summarizes the main Republican-backed tax provisions and what they mean for households:
| Republican-Backed Provision | 2026 Rule | Duration |
|---|---|---|
| Individual tax rates | 10% to 37% | Permanent |
| Standard deduction | $16,100 single; $32,200 joint | Permanent |
| Tips deduction | Up to $25,000 | Through 2028 |
| Overtime deduction | Up to $12,500; $25,000 joint | Through 2028 |
| Senior deduction | Up to $6,000 per person | Through 2028 |
| $5,000 Trump Dividend | Campaign pledge | Not enacted |
The Treasury reported in June that more than 29 million filers have claimed the overtime deduction, with an average deduction above $3,100. 14 A deduction reduces taxable income, so the actual savings depend on your tax bracket.
Democrats have criticized Republicans for promoting the tips and overtime deductions, which expire after 2028, while other provisions are permanent. Johnson has called the law “revolutionary because it is permanent.” 15
Trump has also promised a $5,000 payment to adult citizens if Republicans keep both chambers of Congress, but it has not been enacted. If your income includes significant tips or overtime, a financial advisor can help you compare your return under current law with the proposals that affect you.
How Does Current Legislation Compare With Party Promises?
While both Democratic and Republican proposals could affect your taxes, current legislation determines what you can claim now. The table below compares laws for your 2026 tax year with what each party wants to do down the road:
| Tax Item | Current Rule for 2026 | Democratic Proposals Reviewed | Republican Position |
|---|---|---|---|
| Standard deduction | $16,100 for single filers; $32,200 for joint filers | Booker: $37,500 for single filers; $75,000 for joint filers | Retain current deduction |
| Child tax credit | Up to $2,200 per qualifying child, with up to $1,700 refundable | Booker: up to $4,320 per child under 6; $3,600 per child ages 6 to 17 | Retain current expanded credit |
| Tips deduction | Deduct up to $25,000 in qualified tips | No unified alternative | Retain current deduction through 2028 |
| Overtime deduction | Deduct up to $12,500 in qualified overtime pay; $25,000 for joint filers | No unified alternative | Retain current deduction through 2028 |
| Senior deduction | Deduct up to $6,000 per eligible person age 65 or older | No unified alternative | Retain current deduction through 2028 |
| Top individual income tax rate | 37% | Booker: raise the top rate to 43%; Van Hollen: impose surtaxes on high incomes | Retain current rates |
| Stock buyback tax | 1% | Raise the rate to 4% | Retain current rate |
A party winning control of the House or Senate would not automatically change federal tax law. Any bill must pass both chambers in identical form before reaching the White House. The president then has to sign it, unless lawmakers override a veto with two-thirds support in each chamber. 16
Some tax measures could move through budget reconciliation. That process lets qualifying legislation clear the Senate with 51 votes, or 50 plus the vice president’s tiebreaker, instead of the 60 it usually takes to break a filibuster. Reconciliation also restricts what a bill may include. 17
Until those steps are completed, the 2026 rules remain in effect. The proposals in the table show what could happen later, not benefits you can claim on your current return. The proposals would not change the rules unless enacted into law.
Bottom Line

How much you could save under either party’s tax policies depends on your income, your children’s ages and how you earn your money. The Democratic proposals discussed above would expand tax relief for families with young children and some lower-income households, while raising taxes on high earners. Republican-backed deductions already in effect for 2026 reduce taxable income for eligible workers who earn tips or overtime and adults age 65 and older.
Tax Planning Tips
- If tax laws change, a financial advisor can help you adjust your withholding, deductions and savings plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- If you want to lower your taxable income, see which expenses you can deduct at tax time and whether itemizing could save you more than taking the standard deduction.
Photo credit: ©iStock.com/gguy44, ©iStock.com/Jacob Wackerhausen
Article Sources
All articles are reviewed and updated by SmartAsset’s fact-checkers for accuracy. Visit our Editorial Policy for more details on our overall journalistic standards.
- PBS NewsHour. “Here’s What’s on House Democrats’ Agenda if They Sweep to Power in Midterm Elections.” Oct. 14, 2026. https://www.pbs.org/newshour/politics/heres-whats-on-house-democrats-agenda-if-they-sweep-to-power-in-midterm-elections.
- Office of Rep. Hakeem Jeffries. “Leader Jeffries in Providence: ‘Affordable Healthcare Has to Be a Right Available to Every Single American.'” Sept. 21, 2026. https://jeffries.house.gov/2026/09/21/leader-jeffries-in-providence-affordable-healthcare-has-to-be-a-right-available-to-every-single-american/.
- Office of Rep. Hakeem Jeffries. “Leader Jeffries on House Floor: ‘Vote Yes on Extending the Affordable Care Act Tax Credits.'” Jan. 8, 2026. https://jeffries.house.gov/2026/01/08/leader-jeffries-on-house-floor-vote-yes-on-extending-the-affordable-care-act-tax-credits/.
- Fox News. “Sen Cory Booker Proposes ‘Keep Your Pay Act,’ Eliminating Federal Income Tax on First $75,000.” March 2026. https://www.foxnews.com/politics/sen-cory-booker-proposes-keep-your-pay-act-eliminating-federal-income-tax-first-75000.amp.
- Newsweek. “New Plan Would Make $75,000 of Income Tax Free For Americans.” March 2026. https://www.newsweek.com/new-plan-75000-income-tax-free-americans-cory-booker-11651406.
- Internal Revenue Service. “Revenue Procedure 2025-32.” https://www.irs.gov/pub/irs-drop/rp-25-32.pdf.
- Office of Sen. Cory Booker. “Booker Announces Keep Your Pay Act.” March 2026. https://www.booker.senate.gov/news/press/booker-announces-keep-your-pay-act.
- Internal Revenue Service. “Child Tax Credit.” https://www.irs.gov/credits-deductions/individuals/child-tax-credit.
- Congress.gov. “S.4042 – Keep Your Pay Act.” March 10, 2026. https://www.congress.gov/bill/119th-congress/senate-bill/4042/text.
- PBS NewsHour. “Here’s What’s on House Democrats’ Agenda if They Sweep to Power in Midterm Elections.” Oct. 14, 2026. https://www.pbs.org/newshour/politics/heres-whats-on-house-democrats-agenda-if-they-sweep-to-power-in-midterm-elections.
- Connecticut Public. “Jahana Hayes, Chris Shea Square Off in CT 5th District Debate.” Oct. 14, 2026. https://ctpublic.org/news/2026-10-14/jahana-hayes-chris-shea-debate-congress-5th-district-ct.
- U.S. Senate Committee on Finance. “Americans Win with the Working Families Tax Cuts.” Jan. 8, 2026. https://www.finance.senate.gov/chairmans-news/americans-win-with-the-working-families-tax-cuts.
- Office of Sen. Mike Crapo. “Washington Times: Working Families Tax Cuts Lets Americans Keep More Earnings.” Feb. 2026. https://www.crapo.senate.gov/media/newsreleases/washington-times-working-families-tax-cuts-lets-americans-keep-more-earnings.
- U.S. Department of the Treasury. “New Analysis: The Working Families Tax Cuts Delivers the Largest Share of Tax Relief to American Families and Workers.” June 2, 2026. https://home.treasury.gov/news/press-releases/sb0517.
- WITN (Gray DC). “No Tax on Tips Touted as Permanent, Expires in 2028.” April 15, 2026. https://www.witn.com/2026/04/15/no-tax-tips-touted-permanent-expire-2028/.
- Congressional Research Service. “Introduction to the Legislative Process in the U.S. Congress.” https://www.congress.gov/crs_external_products/R/PDF/R42843/R42843.21.pdf.
- Congressional Research Service. “The Budget Reconciliation Process: Stages of Consideration.” https://www.congress.gov/crs-product/R44058.
