 Trump Wants To Eliminate Income Taxes |
Source |
American Shipper |
Post Date |
04/09/2025 |
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Trump Wants To Eliminate Income Taxes: Here? How Much Extra You? Take Home If You Make $150K a Year President Donald Trump has stated multiple times that he wants to eliminate income taxes and replace them with tariffs.
Such a decision would be one of the most significant changes to the tax code in decades, and it could help Americans save a lot of money.
The government still needs to collect funds, so the tax code could shift to a combination of tariffs and sales tax. However, even if the IRS isn? eliminated, Trump has floated the idea of no one paying taxes if they earn less than $150,000 per year.
Here? how much you could save if Trump eliminates income taxes.
The Effective Tax Rate on $150K
According to the TaxAct tax bracket calculator, a single person would have an effective tax rate of 16.83% on a $150,000 salary in 2025. This doesn? include the FICA tax, which funds Social Security and Medicare.
Someone who earns $150,000 per year would pay about $25,500 in federal income taxes. That? how much you would save if Trump eliminated income taxes.
The only way you?l get ahead on the proposal is if you don? have to pay more than that $25,500 on any extra sales tax or tariffs. People who don? buy as many goods and services are more likely to save money with this model if they are earning $150,000 per year.
State and Local Taxes
Trump only has control over federal taxes, but you can decide where you live. Each state has a different tax code. Some states have progressive tax rates, while others ge a flat income tax across the board.
You can also save money by living in a state that doesn? have any income tax. These are the states that currently do not tax your income:
?Alaska
?Florida
?Nevada
?South Dakota
?Tennessee
?Texas
?Washington
?Wyoming
?New Hampshire
Mississippi is phasing out its state income tax, and there is some speculation that Ohio could be the next state to eliminate income taxes. Some lawmakers are looking to get rid of the tax by 2030, and Vivek Ramaswamy, who is running for governor in Ohio, has suggested that he will eliminate Ohio state income taxes if he takes office.
Will Tax Savings Boost Inflation?
The government still needs money for its operations, and it may turn to the money printer for some help. This scenario could boost inflation and reduce the purchasing power of every dollar.
The key to eliminating federal income taxes without creating high inflation might be the Department of Government Efficiency (DOGE). The more excess federal sping this group eliminates, the easier it is to make major tax cuts without increasing inflation.
The elimination of federal income taxes isn? something that can happen overnight. First, it has to be financially feasible for the government, and DOGE is inted to play a big role in that. It has to cut nearly $2 trillion per year in federal sping just to break even at current levels, which include income tax revenue.
Then, the administration has to introduce tariffs and sales taxes gradually while limiting the IRS?influence. The government collected about $2.4 trillion in individual income taxes in fiscal year 2024, as reported by Treasury.gov. The government has to replace that income stream or lower expenses to become financially solvent.
If payroll taxes that cover Social Security and Medicare are included, then the administration has to replace an additional $1.7 trillion in revenue.
It is possible that a national sales tax could make income taxes unnecessary ?American consumers spent more than $16.1 trillion in the third quarter of 2024 alone, according to Statista ?but it could require a sales tax high enough to offset the savings of an eliminated income tax.
Since the top 10% richest individuals account for almost half of all American consumer sping, this could be a tax that largely falls on the wealthy. However, it remains to be seen how Trump plans to eliminate income taxes and replace them with a viable income source.
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