Is Trump Getting Rid of Federal Income Tax? Tax Reform Plans Explained
Introduction
For over a hundred years, income taxes have been a key way the federal government pays for everything from roads to national defense. Recently, though, bold comments from Donald Trump and some GOP lawmakers have raised a surprising question: Could the income tax really be disappearing?
Online rumors, share-everywhere memes, and fiery speeches have left many people anxious at tax time and unsure of the facts. In this post, we'll highlight the truth behind the hype, take a close look at the One Big Beautiful Bill (OBBB) that Trump often mentions, and spell out whether the country is moving toward a time when no one pays federal income tax—or if that’s just a far-off fantasy.
Trump’s Public Tax Proposals
Donald Trump doesn’t disguise the fact that he thinks the U.S. tax code is a tangled mess. For several years, he and supporters have promoted ideas that sound big-league, the sort that could shake things up overnight:
Scrap the federal income tax for anyone making less than $150,000 a year
Cut taxes on tips, overtime hours, and Social Security checks
Swap the income tax with higher tariffs or a national sales-tax-style plan
When he’s on stage at a rally, Trump pitches these changes as a lifeline for working Americans, framing it as sticking it to foreign sellers while Americans get to keep more of their pay. The crowd loves the sound of “fairer” and “lighter” taxes.
The hard fact, though, is that these measures have never gone beyond the speech. They’re labeled as promises, not laws, and they’re more like signposts trying to direct future tax policy than snapshots of what’s coming next year.
What the One Big Beautiful Bill (OBBB) Really Does
The OBBB landed on President Trump’s desk in July 2025, and the news hailed it as a game-changer. Trump called it “historic,” but it’s really the “let’s stick with what we’ve got” move—more like a sequel to the 2017 TCJA than a grand new production. Here’s the plot twist on what it contains:
Lock and Load on the TCJA Tax Brackets: The brackets that drop from 10% to 37% are now coded in as a forever feature, not a limited-time special.
Bigger, Better Standard Deductions: The bill boosts the standard deduction—more headroom on your taxable income whether you’re single or married.
Targeted and Thematic Tax Helpers:
Tips Matter: A new targeted credit for the folks who live on tips, like bartenders and servers.
Seniors Say, “Thank You!”: Income relief kickers for retirees.
Child Care Keeps on Growing: An extension and bump to the existing child-care credits.
Tease, Don’t Launch—Consumption Tax Chat: A few footnotes talk about maybe, someday, moving toward income- that tariffs and other consumption-driven fees will foot the bill.
What the OBBB Does Not Do: Say goodbye to income tax. Speculative headlines can dream, but headlines can’t sign checks. The income tax statue outlasted the rumor party, and it’s still the tax workhorse fueling the federal budget.
Proposals vs. Reality
Dream vs. Do: Trump’s headline acts ring big and bold—but they read like sketches on a napkin. Ditch the federal income tax altogether or reinvent how we take in revenue? Congress would need to carve a new tax cliff, not just glance at it.
Income tax is still how the U.S. keeps its lights on, bringing in over $3 trillion every year. Nothing else—be it tariffs or any quick fix—can come close without throwing the economy into chaos.
The new OBBB bill doesn’t end the tax, it tweaks it a bit. It keeps the brackets we know, throws in a few extended cuts and new credits, and gestures at tariffs, but the backbone stays the same.
Imagine the entire income tax system as a patient in a hospital with heart disease. Needed reforms are on the table, yet some earlier steps, like trimming IRS budgets and staffing under the Trump years, look like unplugging the oxygen monitor without giving meds. Such cuts starve the system, and we don’t yet know the replacement therapy.
Can the income tax eventually vanish? Here are some larger signals to watch:
Trump has promised—many times—to ditch the income tax in favor of loading up tariffs, yet tariffs by themselves can’t come close to covering the budget.
A project called Project 2025, embraced by some on the right, sketches a roadmap: first, shrink income taxes; next, build up a consumption tax framework.
Huge IRS staffing cuts, with thousands of agents let go and more layoffs planned, let the audit and collection muscles atrophy. When more people underreport or delay paying, confidence in taxes can fray.
Could Income Tax End? The Big Picture
Republican-led states across the country have cut personal income taxes every year for a while. Instead, they make up for the lost revenue by hiking up sales taxes and adding new excise taxes on things like fuel and booze.
The Danger: If state budgets keep falling short, and the IRS keeps losing its ability to make sure people pay what they owe, lawmakers may feel they have no choice but to completely rewrite the tax code.
Why Replacing Income Tax Is So Hard
Doing away with the personal income tax goes beyond politics—it raises serious economic questions:
Revenue Shortfall: Last year, federal revenue was 17.1% of the economy, while spending hit 23.4%—one of the biggest annual gaps the country has seen outside of war. Take income taxes away and the hole grows even wider.
Inflation Risk: If states use tariffs and higher sales taxes to replace lost income-tax revenue, shoppers could pay more at the checkout counter. Families that rely on paychecks rather than investments would feel the pinch the worst.
Confidence Crisis: Killing the whole tax structure, even for a short time, with no detailed plan to replace it, could scare away voluntary tax compliance and erode the public trust that keeps the system running.
Economists are clear: a future consumption tax has potential, but rushing in without a safety net is a recipe for trouble, at best.
Conclusion
Will Trump axe the income tax? No, not today, and not with the One Big Beautiful Bill he keeps mentioning. His speeches suggest we're moving toward a country funded solely by tariffs, but the reality is more tangled. The income tax is still the main source of money for the federal government, and scrapping it would take a coordinated, sweeping rewrite of the Code that we're not seeing in the near future.
For the rest of us, it’s still business as usual. The OBBB might extend the 2017 tax cuts and toss in some shiny new credits, but the income tax isn’t disappearing any time soon. Stay the course.
If you have questions about how Trump’s federal income tax plan could impact you, reach out to Dimov Associates today for expert tax guidance custom-tailored to your needs.
FAQs
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