;height:auto;width:100%25)
It sounds like something out of a 19th-century history book. Honestly, the idea of a world without 1040 forms and April 15th deadlines is the ultimate American dream for some. Donald Trump has been floating this exact scenario—tossing out the federal income tax entirely and letting tariffs on foreign goods pick up the tab.
He calls it "all-tariff" revenue.
✨ Don't miss: Why What is a House Brand Matters More Than the Name on the Label
But can you actually run a 21st-century superpower on the same math used back when we still used oil lamps? It’s a wild conversation that has moved from campaign rallies to the halls of Congress.
The Big Goal: Trump Doing Away With Income Tax
The core of the proposal is basically a massive swap. Instead of the government taking a bite out of your paycheck every two weeks, they would charge companies for the "privilege" of bringing products into the U.S. market.
Trump argues this would solve two problems at once. First, it kills the IRS (which he’s called a "disaster"). Second, it forces manufacturing back to American soil because foreign goods would become too expensive.
During a June 2024 meeting with House Republicans and later in various interviews, Trump leaned heavily into this "Old School" economics. He’s pointed to the McKinley era as proof it works. Back then, tariffs were the primary source of federal funds. But there’s a catch. A big one. The government back then didn't have to fund Medicare, Social Security, or a $800 billion-plus military.
Let's Look at the Math (It’s Kind of Messy)
To understand if trump doing away with income tax is actually doable, you have to look at the sheer size of the numbers.
👉 See also: Rafale Jet Fighter Stock Market: Why Defense Investors Are Still Obsessed
The federal government currently hauls in about $2.4 trillion a year just from individual income taxes. That is a mountain of cash. On the flip side, we currently import about $3 trillion to $4 trillion worth of stuff annually.
If you do the napkin math, you'd need a universal tariff of roughly 60% to 70% on everything coming into the country just to break even. And that’s assuming people keep buying the same amount of stuff.
They won't.
When you slap a 60% tax on a $20,000 car, it becomes a $32,000 car. People stop buying. When imports drop, the tax base for those tariffs shrinks. Economists call this the "Laffer Curve" effect on trade. If you set the rate too high, you actually end up making less money because you've killed the very thing you're taxing.
Who actually pays for this?
There’s a common misconception that foreign countries pay tariffs. They don't. The American company importing the goods pays the bill to U.S. Customs. Usually, they pass that cost straight to you, the consumer.
So, while your paycheck might not have federal withholding anymore, your grocery bill, your tech gadgets, and your clothes would get a massive "hidden" tax hike. For a family living paycheck to paycheck, this could be a tough trade-off. Lower-income households spend a much larger chunk of their money on "stuff" than the wealthy do.
The Reality of 2026: The "One Big Beautiful Bill Act"
While the "all-tariff" idea is the long-term vision, the reality in early 2026 is a bit different. Instead of a total repeal of the 16th Amendment (which allows the income tax), we’re seeing a massive restructuring through what’s being called the One Big Beautiful Bill Act (OBBBA).
Trump signed this into law in July 2025, and it’s hitting our 2026 filings hard. It didn't delete the income tax, but it doubled down on specific carve-outs:
💡 You might also like: Is Vanguard Total Stock Market ETF VTI Actually the Only Investment You Need?
- The Senior Bonus: A $6,000 deduction for people over 65, which basically functions as an "end of tax on Social Security" for most middle-class seniors.
- No Tax on Tips: A huge win for the service industry. Waiters and bartenders can now exclude up to $25,000 of tip income from their federal taxes.
- The Overtime Deduction: If you’re an hourly worker pulling more than 40 hours, the "extra" portion of your pay (the time-and-a-half part) is now deductible up to $12,500.
These are essentially "mini-repeals" of the income tax for specific groups. It’s a step-by-step approach rather than a total overnight delete.
The Legal and Global Headaches
Getting rid of income tax isn't just an economic move; it's a legal nightmare. The 16th Amendment is baked into the Constitution. Repealing it requires a two-thirds vote in both the House and Senate, plus three-fourths of the states to agree.
That is a skyscraper-high hurdle.
Then there’s the global trade war. If the U.S. goes to a 60% universal tariff, every other country will retaliate. Our farmers would find it almost impossible to sell soy or corn in China or Europe. Our tech companies would face massive "entry fees" abroad.
Actionable Steps for the Taxpayer
Whether or not the income tax eventually disappears, the 2025/2026 shifts are real and require a change in how you manage your money.
- Check Your Withholding: With the new OBBBA deductions for tips and overtime, you might be overpaying the government throughout the year. Adjust your W-4 if you’re in a "qualified service trade."
- Track Your VINs: If you bought a U.S.-assembled car, you can now deduct up to $10,000 in interest. You’ll need the Vehicle Identification Number on your return.
- Senior Planning: If you’re 65 or older, make sure you're taking the "Senior Bonus" on top of your standard deduction. It’s a massive shield against Social Security taxation that many might miss in the first year.
- Watch the Courts: There is a pending Supreme Court challenge regarding the President's power to set tariffs via "emergency powers." The outcome will dictate how high these prices (and the potential tax offsets) will actually go.
The talk of trump doing away with income tax has fundamentally shifted the debate from "how much should we tax" to "how should we tax." We aren't at a 0% income tax rate yet, but the 2026 rules have certainly made the code look a lot more like a list of exceptions than a universal rule.