Trump proposes to remove income tax in USA

Trump says he may cut or even abolish income tax in the US, leveraging revenue from tariffs to sustain government funding

Trump stated on November 27, 2025 that revenue from tariff income might soon be large enough to allow for a complete cut of federal income taxes — asserting tariffs could replace the revenue previously collected from personal income tax.
In earlier proposals (2025), there were discussions about eliminating federal income taxes for individuals earning below certain thresholds (e.g. under US$150,000 per year)
Alongside this, other tax-reform ideas under discussion include removing taxes on bonuses such as tips and overtime pay, and reducing tax burdens on seniors

Under existing law, individual income tax in the US operates through multiple marginal tax brackets (from 10 % up to 37 %)
In 2025, Congress passed and the president signed One Big Beautiful Bill Act (OBBBA), which extended and adjusted many tax provisions — including increased standard deductions and other deductions/credits — but it did not abolish income tax.
As of now, the tax system collects income tax as its main revenue source; replacing that with tariffs alone would represent a major structural shift.

If income tax were abolished nationwide:

A large portion of American households — especially middle- and lower-income — might see their take-home pay increase substantially. Proposals aimed at lower- and middle-income earners may remove their tax liability entirely
But it also means the government must find alternate revenue sources to fund public services. Trump argues tariffs could provide enough revenue — but critics question whether tariffs can cover the vast revenue currently generated by income taxes
According to think-tank estimates, eliminating income taxes for a large income group could reduce federal revenue by tens of trillions over years, complicating funding for social programs, defense, and infrastructure.

This proposal matters because it touches on the core of U.S. fiscal policy: how to fund the federal government.

Potential benefits:

Higher disposable income for many Americans.
Simplification of tax code for many households (especially those previously filing returns).
Possible boost to consumer spending — if people keep more of their income.

Major concerns:

Risk of large budget deficits if alternative revenues (tariffs) fall short.
Tariffs may raise costs for consumers on imported goods — shifting burden from taxpayers to buyers.
Dependence on trade revenues could make federal budgets volatile and tied to global trade dynamics.

Any move to abolish income tax must pass through the U.S. Congress. As of today, no law has replaced income tax with a tariff-funded budget.
Detailed economic modeling is required to understand long-term impacts: revenue forecasts, inflation effects from tariffs, burden on lower-income vs higher-income groups.
Public debate and political negotiations — such a sweeping change will face resistance, especially from those concerned about social safety nets, inequality, and fiscal stability.