Small business is big for America, and both Donald Trump and Kamala Harris have acknowledged this and made bold promises on the campaign trail.

According to a Bankrate’s 2024 Employment Security Survey, 29 percent of workers plan to start their own business in the next year. The younger generation seems to be leading this charge, with 41 percent of  Gen Z workers stating they want to become entrepreneurs.

As the American small businesses sector grows, both Trump and Harris have met with business owners and put forth policies that promise to tackle inflation, energy costs, global markets, taxes, immigration and more, all with the aim of winning over small business owners and promising growth and success if elected.

Though the president does hold a great deal of power over policy that can influence business, the economy and otherwise, it’s important to remember that the executive branch is only one part of the equation when it comes to law and policy.

“Whoever wins the White House will need a cooperative Congress to win legislative approval of proposals related to key priorities,” says Mark Hamrick, senior economic analyst for Bankrate.  “The tendency more often than not in recent years has been for voters to maintain divided government, meaning a high bar for legislative approval or in other cases blocking consideration or passage. Either Trump or Harris could have to work to win bipartisan support for their proposals where executive action isn’t an option.”

With just hours left until Election Day, we break down the most relevant small business policies from each campaign.

What Donald Trump is promising

The Trump-Vance campaign’s promises include sweeping changes to tax, immigration and energy policy, with the aim of opening up new opportunities for businesses and workers while incentivizing an American-centered economy and workforce.

Trump’s key policies include the goals of reducing dependency on foreign goods and energy, prioritizing citizen participation in the workforce by deporting undocumented migrants and cutting taxes for both workers and businesses.

Reducing energy costs

When asked about reducing inflation and helping small businesses, Trump claims he will focus on lowering energy costs in order to bring down prices across the board.

“We will drill, baby, drill, and by doing that we will lead to a large-scale decline in prices,” Trump said at the Republican National Convention in July.

Energy costs have been one of the driving factors behind inflation. Due to a variety of federal policies, severe weather events and global conflicts, energy prices have spiked since 2021. While prices have since stabilized, the cost of gas and oil has been a sore spot for many Americans.

Trump claims that by returning the supply chain back to American energy – in particular, oil and natural gas – fuel costs will go down.

The impact

The price of fuel can exponentially increase the price of goods and services, as it takes energy to manufacture, transport, store and distribute goods, and retail businesses rely on energy to keep their physical locations lit, heated and connected.

As inflation continues to be a top concern for small businesses, according to an August 2024 survey by the National Federation of Independent Business, driving down prices through decreased energy costs can be a welcome reprieve for struggling businesses.

However, the path may not be so straightforward.

“Oil and energy prices are among the most complicated in all of the U.S. economy,” says Sarah Foster, principal U.S. economy and Federal Reserve reporter for Bankrate. “For starters, they’re volatile, and they’re based on a whole number of factors — namely, supply and demand and global production. Those have a lot more to do with than just who sits in the White House: wars, demand for energy and even weather can all influence the amount of supply on the market.”

Others have criticized Trump’s emphasis on fossil fuels such as oil over renewable energy, citing climate change and pollution concerns.

Mass deportation

Both Trump and his running mate J.D. Vance have promised to deport millions of undocumented immigrants from the United States, claiming that doing so will boost American wages and workforce participation.

“We cannot have an entire American business community that is giving up on American workers and then importing millions of illegal laborers,” Vance argued in an October 2024 interview with the New York Times. “It’s one of the biggest reasons why we have millions of people who’ve dropped out of the labor force. Why try to re-engage an American citizen in a good job if you can just import somebody from Central America who’s going to work under the table for poverty wages?”

As of 2022, 8.3 million undocumented immigrants take part in the United States workforce, This represents 4.8 percent of the workforce according to Pew Research. Removing this number of workers from the labor pool could have a dramatic impact on businesses and the economy as a whole.

The impact

Mass deportation, if it works out as Trump intends, could open up jobs for American citizens, offering an on-ramp for unskilled laborers to enter the workforce, bolstering the middle class and increasing wages for American workers.

However, economists argue that mass deportation could have a largely negative effect on the economy, exacerbating labor shortages, removing workers from support industries such as child and elderly care that allow other workers to participate in the workforce and decreasing business demand for everything from restaurants to cars.

Tariffs on imported goods and materials

One of Trump’s key proposals has been to levy tariffs on imported goods and materials with the aim to shift manufacturing and production to the United States. He has suggested a 20 percent blanket tariff on all imported goods, a 60 percent tariff on Chinese products coming into the United States, and other tariffs on international manufacturing and production.

Tariffs act as a tax on imported goods, with the importer who brings the product to the United States paying the tariff on the sales price.

Trump claims that by enforcing tariffs, manufacturers such as John Deere will be punished for outsourcing American jobs to other countries.

“It’s hurting our manufacturing. And if you [take production out of America], you’re going to have a 200 percent tariff put on the product that you make in Mexico, right across the border,” Trump said at a September 2024 roundtable in Pennsylvania.

The impact

Tariffs’ impact on businesses will depend on the business model of the enterprise in question. Enterprises whose business models are based on. Those who rely on imports like construction materials, fruits and vegetables, and auto parts from foreign countries for their manufacturing and production will have to pay the tariff.

These businesses, in turn, will have to eat the cost, pass on the cost of the tariffs to the consumer, or shift their supply chains to the United States. Some economists argue that tariffs will fuel inflation on everything from houses to groceries.

On the positive end, American manufacturers and producers demand more as businesses turn to them for their goods. Advocates for tariffs argue that a focus on domestic manufacturing will help resolve supply chain snarls. In addition, it will increase jobs and consumer wages, giving American workers more disposable income and strengthening the economy.

Eliminating taxes on overtime

In addition to eliminating taxes on tips, Trump has proposed cutting taxes on overtime wages.

“The people who work overtime are among the hardest-working citizens in our country, and for too long, no one in Washington has been looking out for them,” Trump said at an Arizona rally in September 2024. “Those are the people that really work. They’re police officers, nurses, factory workers, construction workers, truck drivers and machine operators.”

Overtime is classified as wages paid on hours worked over the 40-hour-a-week benchmark for hourly employees, with businesses required to pay time-and-a-half on each hour worked.

The impact

Exempting overtime from taxes could make recruiting hourly paid workers easier for businesses. No taxes means more take-home pay for workers racking up overtime, making it more attractive than an equivalent salaried job.

However, the tax incentive could work the wrong way, Hamrick warns.

“It could help smaller businesses retain and attract certain workers,” Hamrick says. “It would be negative, however, if workers and businesses felt compelled to work more or longer hours when many might already feel overworked.”

If passed, businesses will have to be mindful about how they apply overtime and incentivize workers to stay longer – or shorter – on the clock.

Cutting taxes for American-employed companies

Trump has proposed cutting the corporate tax from 21 percent to 15 percent, with a catch: only businesses who exclusively employ Americans will get the tax break.

“You have to make your product in America,” Trump said at an Economic Club of New York speech in September 2024. “If you outsource, offshore, or replace American workers, you’re not eligible for any of these benefits.”

Trump’s aim with the policy is to increase employment of American workers, intending to bolster the American economy, boost wages by preventing offshore workers from undercutting domestic wages and put more money into American workers’ pockets.

The impact

If the policy works as intended, more money could stay in the United States economy, as domestic workers would see more labor force participation and spend their paychecks in the United States, instead of the pay going overseas.

However, the policy has some downsides. Immigrant labor is critical for many businesses, and the policy could tighten the labor market.

“One of the major challenges for all businesses is finding well qualified workers who can be retained,” Hamrick says. “One of the great historical strengths of the U.S. economy has been diversity and immigration, which help satisfy demand for labor and talent. If businesses are restricted from finding the workers they want and need, that will be an impediment to success.”

Eliminating the federal income tax

Trump has mentioned eliminating federal income tax entirely and replacing them entirely with tariffs, which he argues will reduce the tax burden for the average American and place it on importers.

The impact

With fewer taxes to pay, consumers could have more disposable income to spend, energizing the economy. It would also reduce wage pressure on businesses as Americans would have relatively larger take-home paychecks.

However, economists have warned that getting rid of the income tax may cause legislators to bring in federal revenue through other avenues, such as sales and property taxes, increasing prices and operating costs for businesses. The policy would also face heavy opposition from Congress and federal agencies.

What Kamala Harris is promising

Harris has based her platform largely on promises of equity, inclusion and fairness for people and businesses in the United States. Many of her key stances rely on legislation to enforce fair prices, livable wages and economic growth through diverse entrepreneurship and business opportunities.

Restrictions on price gouging

Harris’ campaign promises tackle inflation by federally banning price gouging. Harris’ campaign website has stated Harris will put forth policy cracking down  on “anti-competitive practices” between large corporations and target grocery stores and food suppliers with high prices.

How the Harris administration defines price gouging for businesses and suppliers has not yet been detailed, as price gouging rules are typically applied to businesses unfairly raising during times of emergency, such as natural disasters.

The impact

Harris’ policy seems to be primarily aimed at larger corporations. However, small businesses could feel the ripples.

Anti-competition laws that target consolidation and monopolies in the business sector can help lend small businesses room to grow and compete against larger corporations.

On the downside, widespread price caps can lead to a restriction in supply. Because the costs of energy, manufacturing, packaging, labor and transport tend to be fixed, businesses with smaller margins may drop certain products, or have to drop out of the market altogether.

In addition, some economists warn that price caps don’t get to the root of what causes inflation, which can include supply chain issues, labor shortages, federal money supply, global market snarls and energy prices.

Increasing the minimum wage to $15 an hour

Harris has promised to raise the federal minimum wage to $15 an hour, hoping to address the cost of living crisis for thousands of Americans.

The federal minimum wage currently stands at $7.25 per hour, which totals to $15,080 per year with a 40-hour workweek over 52 weeks a year. According to Bankrate’s annual Financial Freedom Survey, Americans feel they need to earn an average of about $186,000 a year to live comfortably, suggesting that the minimum wage is too low for even full-time workers to feel comfortable.

The impact

A higher minimum wage can make recruiting workers easier for employers, easing the labor shortage and making worker retention easier.

However, increasing the minimum wage would increase labor costs for businesses, thinning profit margins and possibly increasing prices and leading to business owners having to short their staff.

This can lead to a net loss in jobs. When California raised the minimum wage to $20 in 2023, the fast food industry shed over 10,000 jobs, according to the Hoover Institute. Restaurant prices also rose across the state, according to a report by Datassential.

Forgivable loans for Black entrepreneurs

Harris has proposed increasing diversity and opportunity in the business sector by offering over $1 million in loans for Black entrepreneurs, with up to $20,000 of the loans being forgivable for borrowers.

This “Opportunity Economy,” as the campaign calls it, aims to “help entrepreneurs access the capital and resources they need to launch and grow their businesses, build wealth, and strengthen their communities—especially Black male entrepreneurs,” according to a statement released by the campaign in October 2024.

The policy will also include education and mentorship programs, protections around digital and cryptocurrencies, and easing laws around marijuana sale and usage.

The impact

With only 8 percent of SBA 7(a) loans and 3.6 percent of SBA 504 loans going to Black applicants, the policy could open up opportunities for diversity and inclusion in the business sector for an underrepresented demographic in the United States.

With the loans being focused on Black entrepreneurs with startups and “locating in underserved communities,” according to the statement, it could provide a foothold for businesses and entrepreneurs to revitalize communities in need.

“If implemented as proposed, this could be a big help for diverse communities where small businesses have struggled or failed to attract interest,” Hamrick says. “A program like this could help Black entrepreneurs find a path in starting a new business, perhaps owning the next big successful enterprise.”

Increasing startup-expense tax deductions

Harris has also promised to increase the startup tax deduction from the current $5,000 to $50,000.

“Nobody can start a small business on $5,000,” Harris said at a visit to Wisconsin-based Penzeys Spice shop in September 2024. “What it does is allow people who have the ambition and the passion and the work ethic and the innovation to actually get a leg up.”

The deduction would apply to new small businesses who have turned a profit within the fiscal year, aiding Harris in reaching her stated goal of 25 million new startup applications in her first term as president.

The impact

With the average cost to start a business being $40,000, the deduction could prove to be a lifeline for businesses in need of a leg up.

However, the deduction would only apply to existing businesses that may need the tax break as much as a startup. In addition, the deduction would only apply to profitable businesses, which may leave out many startups struggling to get afloat – especially as many businesses don’t turn a profit for the first few years.

The bottom line

Both candidates have proposed a myriad of policies and solutions to helping small businesses thrive in the United States.

Donald Trump’s policies focus on bringing industry back to the United States, uplifting American workers through the labor market and reducing energy and tax costs for businesses. Kamala Harris’ policies focus on increasing opportunity for disadvantaged entrepreneurs, increasing tax deduction, tackling high prices through legislation on price gouging and increasing the minimum wage for workers.

Whichever candidate wins will have to work with Congress in order to pass policy and legislation, which will take bipartisan cooperation and negotiation over the next four years.