What if Americans never had to file income tax returns again? President Trump has proposed exactly that—completely eliminating the income tax over the next couple of years. During a video call with U.S. military personnel in 2025, Trump suggested replacing income tax revenue with money collected from tariffs on imported goods.
Trump claimed tariff revenues would be “so large” they could fund government operations without needing income taxes. This idea represents a dramatic shift from America’s current tax system, which uses seven income tax brackets ranging from 10% to 37%. The highest rates kick in at $626,350 for single people and $751,600 for married couples filing together.
Trump’s tariff proposal would replace America’s complex seven-bracket income tax system with import duties alone.
The proposal comes after Congress made the 2017 Tax Cuts and Jobs Act permanent through legislation called the “One Big Beautiful Bill” in July 2025. Trump’s campaign also included other tax-cutting ideas like exempting tips, overtime pay, and Social Security benefits from taxes. Removing Social Security taxes alone could reduce federal revenue by about $1.5 trillion over ten years.
Supporting Trump’s vision, the FairTax Act of 2025 was introduced in Congress to abolish the IRS and replace income taxes with a national sales tax. The bill argues that income tax hurts economic growth and reduces living standards. It would also eliminate estate and gift taxes while funding Social Security through general revenue instead of payroll taxes. The FairTax would implement a 23% rate starting in 2027 on the use or consumption of taxable property and services.
However, the math presents challenges. Income taxes currently provide a huge chunk of federal revenue, while tariffs historically collect much less money. The corporate tax rate was permanently lowered to 21% from 35% under previous reforms, demonstrating how significant tax changes can impact government revenues. Think of it like trying to fill a swimming pool with a garden hose instead of a fire truck—the flow just isn’t the same size. Such major economic shifts could affect international trading patterns, especially given the interconnected nature of global markets where exchanges operate across different time zones and trading hours.
Higher tariffs could also create problems with other countries, potentially leading to trade wars that hurt the economy. When nations impose tariffs on each other’s goods, prices often rise for everyone involved.
While abolishing income tax would certainly simplify tax season, whether tariff revenues can truly replace billions in lost income tax remains the billion-dollar question facing this unprecedented proposal.
