You've probably seen the headlines or heard the chatter. It sounds like a dream for some and a nightmare for others: the idea that the federal government could just... stop collecting income tax.
It’s the kind of thing that makes people lean in during a dinner conversation. Donald Trump has floated the idea of replacing the entire federal income tax system with revenue from tariffs. He calls it "the most beautiful word in the dictionary." But if you’re looking for a simple "yes" or "no" on whether the tax man is disappearing, the reality is way more complicated than a Truth Social post.
As of early 2026, the short answer is no. You still have to pay.
In fact, the Internal Revenue Service just released the updated brackets for the 2026 tax year. If you're single and making $50,000, you’re still in that 12% bracket. If you’re a high-earner hitting over $640,600, you’re still looking at a 37% top rate. So, the system isn't dead. Not even close.
But while the income tax hasn't vanished, the rules of the game have shifted massively thanks to a piece of legislation called the One Big Beautiful Bill Act (OBBBA), which became law in July 2025. This law basically took the old 2017 tax cuts—the ones that were supposed to expire—and made them permanent. Plus, it added a bunch of new twists that actually make "is Trump removing income tax" a valid question for certain specific groups of people.
The Tariff-for-Tax Swap: Vision vs. Reality
Trump’s big pitch is that high import taxes on foreign goods could bring in enough cash to eliminate the need for personal income taxes. He’s mentioned this to service members and in various campaign-style videos recently. He thinks the money we're taking in from tariffs will eventually be so "enormous" that the income tax becomes obsolete.
Honestly? Most economists think the math is a total mess.
In 2024, the federal income tax brought in roughly $2.4 trillion. To replace that with tariffs, you’d need to tax imports at rates well over 60%. That’s a massive jump from the 10% baseline reciprocal tariff currently being implemented. Steve Ellis, the president of Taxpayers for Common Sense, says it’s "not remotely possible" to fully fund the government this way.
💡 You might also like: Missouri Paycheck Tax Calculator: What Most People Get Wrong
We’re talking about a government that already spends $1.8 trillion more than it takes in. If you kill the income tax without a perfect replacement, the national debt would just explode into the stratosphere.
So, Who Actually Stops Paying?
Even if the whole system stays, some people are basically seeing their income tax "removed" for specific types of earnings. This is where the OBBBA actually changed things for the average worker.
If you’re a waiter or a bartender, you might feel like the income tax is gone. The "no tax on tips" policy is now in full swing for the 2026 tax year. Workers can now deduct up to $25,000 of tip income from their taxable earnings. The IRS has been a bit confused about who counts—they initially put out a list of 68 job categories—but they’ve announced a transition period to help people figure it out.
Then there’s the "no tax on overtime" part.
Hourly employees who work more than 40 hours a week can now deduct up to $12,500 of that extra pay. But there’s a catch that a lot of people are missing. You only get to deduct the extra part of the pay. If you make $20 an hour and your overtime rate is $30, you only deduct that extra $10. It’s a nice perk, but it’s not exactly a "tax-free life."
Brackets and Deductions: The 2026 Numbers
For everyone else, the income tax is very much alive. The IRS isn't going anywhere, and they’ve already adjusted the standard deduction for inflation.
For the 2026 tax year (the returns you'll file in early 2027), the standard deduction is $16,100 for single filers. If you’re married and filing jointly, that number jumps to $32,200. This is actually a slight increase from 2025. It’s meant to shield a bit more of your money from the tax man's reach before the percentages start kicking in.
📖 Related: Why Amazon Stock is Down Today: What Most People Get Wrong
2026 Federal Income Tax Brackets (Estimated)
- 10%: Income up to $12,400 (Single) / $24,800 (Joint)
- 12%: Income up to $50,400 (Single) / $100,800 (Joint)
- 22%: Income up to $105,700 (Single) / $211,400 (Joint)
- 24%: Income up to $201,775 (Single) / $403,550 (Joint)
- 32%: Income up to $256,225 (Single) / $512,450 (Joint)
- 35%: Income up to $640,600 (Single) / $768,700 (Joint)
- 37%: Income over $640,600 (Single) / $768,701 (Joint)
One thing that’s really interesting is the new Senior Deduction. If you're 65 or older, you can claim an extra $6,000 deduction. This phases out if you’re making over $75,000 as a single person, but for a lot of retirees, it basically wipes out a huge chunk of their remaining tax liability. It’s almost like a partial removal of the income tax for seniors.
The Stealth Taxes You Might Not See Coming
While Trump talks about cutting the income tax, his administration has been busy adding other types of "fees" that feel a lot like taxes.
For instance, starting January 1, 2026, there’s a new 1% excise tax on remittance transactions. If you're sending cash or money orders abroad, the provider has to collect that 1% and send it to the IRS. It’s not an "income tax," but it’s money coming out of your pocket nonetheless.
Also, the "Trump Accounts" for children are set to launch in July 2026. The government puts in $1,000 to start, and you can add up to $5,000 a year. It’s a great way to save, but critics point out that the money to fund these has to come from somewhere—likely those very tariffs that are supposed to be replacing your income tax.
Why This Matters for Your Wallet
The talk of "removing" the income tax is mostly political theater for now.
However, the shift toward a tariff-based economy has real-world consequences for what you pay at the store. If the government isn't taking 20% of your paycheck, but the price of your car, your phone, and your groceries goes up by 20% because of import taxes, are you actually better off? That’s the debate currently raging in Washington.
The Tax Foundation notes that the OBBBA effectively made the lower tax rates of the last few years permanent. That's a huge win for predictability. You don't have to worry about your rates spiking in 2026 like we thought they might a few years ago.
👉 See also: Stock Market Today Hours: Why Timing Your Trade Is Harder Than You Think
But keep an eye on the Alternative Minimum Tax (AMT). The 2026 rules have shifted the phase-out thresholds. For single filers, it now starts phasing out at $500,000. For some high-income earners, this could actually result in a slight tax increase compared to 2025. It’s a reminder that even when the headline says "tax cuts," there's usually some fine print.
Actionable Steps for the 2026 Tax Year
Don't wait until next April to figure this out. The transition is happening now.
First, if you're an hourly worker, check your pay stubs. Make sure your employer is correctly identifying your overtime pay so you can take advantage of that $12,500 deduction. You'll need clean records to prove what was "base" and what was "extra" when the IRS comes knocking.
Second, if you're a tipped employee, start using a tracking app or a detailed log. The IRS has promised a "relaxed approach" for this filing season, but they still expect you to report everything. Having a solid paper trail for that $25,000 deduction is your best defense against an audit.
Third, look into the new HSA rules. Starting in 2026, Bronze and Catastrophic health plans are officially HSA-compatible. This means you can stick tax-free money into an account for health expenses even if you don't have a traditional high-deductible plan. It's one of the easiest ways to lower your taxable income without actually making less money.
Finally, if you're over 65, talk to your tax preparer about the OBBBA Senior Deduction. It’s a $6,000 gift from the federal government that a lot of people are going to miss because it’s so new.
The dream of a tax-free America is still just that—a dream. But between the new deductions for workers and the permanent lower brackets, the 2026 tax landscape is definitely looking a lot different than it did a few years ago. Just don't throw away your W-2s just yet.