What Really Happened With the Proposal: Did Trump Get Rid of Income Tax?

If you've been scrolling through your news feed lately, you’ve probably seen some wild headlines. Some claim the IRS is basically packing its bags, while others shout that we’re trading our W-2s for import tariffs. It's a lot. And honestly, the question did trump get rid of income tax has become one of those things people argue about at the dinner table without actually knowing the math.

Here is the short answer: No, he didn't. Not exactly.

But it’s way more complicated than a simple "yes" or "no." We are currently living through one of the biggest shake-ups to the U.S. tax code since the eighties. On July 4, 2025, President Trump signed the One Big Beautiful Bill (OBBB) Act, which is basically a massive sequel to his 2017 tax cuts. It changed a ton of rules, but it didn't delete the income tax from the history books.

The Tariff vs. Income Tax Reality Check

There was this idea floating around during the 2024 campaign—and it’s popped up again in 2025—that we could just replace the federal income tax with tariffs. The logic? Tax the stuff coming in from China and Mexico so we don't have to tax the money you earn at your job.

It sounds great on a bumper sticker.

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But the math is a nightmare. In 2024, the federal government pulled in about $2.4 trillion from individual income taxes. To replace that entirely with tariffs, you’d have to tax imports at such a high rate that a toaster might cost as much as a TV. Experts like Douglas Holtz-Eakin from the American Action Forum have pointed out that you'd need tariffs well over 60% across the board.

Instead of getting rid of the tax, the Trump administration has used these new tariffs to fund specific "dividends" and tax carve-outs. We’re talking about a $2,000 per person tariff dividend that was proposed to offset the higher costs of goods. So, while you're still paying income tax, the government is trying to use tariff money to send some of it back to you. Kinda circular, right?

What Actually Changed in 2025 and 2026?

So, if the income tax didn't go away, what did the One Big Beautiful Bill actually do? Basically, it took the temporary cuts from 2017 (the TCJA) and made them permanent. If this bill hadn't passed, your taxes would have actually jumped up significantly in 2026.

Here is a breakdown of what your tax return looks like now:

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• The Seven Brackets are Permanent: The rates we’ve been using—10%, 12%, 22%, 24%, 32%, 35%, and 37%—aren't going anywhere. For 2025, the 10% bracket covers your first $11,925 if you're single.
• No Tax on Tips: This was a huge campaign promise. If you’re a server or a bartender, you can now deduct up to $25,000 in tips from your federal income tax. But—and this is a big "but"—you still have to pay payroll taxes (Social Security and Medicare) on that money.
• The Overtime Deduction: Similar to tips, there is a new deduction for "qualified overtime pay." You can deduct up to $12,500 of that time-and-a-half pay. It’s meant to reward the "grind," but it only lasts through 2028 unless Congress extends it again.
• Car Loan Interest: Remember when you could deduct the interest on your car loan? That’s back, sort of. You can deduct up to $10,000 in interest on a loan for a U.S.-assembled vehicle, but only if you make less than $100,000 (or $200,000 for couples).

The standard deduction also got a nice bump. For the 2025 tax year (the one you file in early 2026), it’s $15,750 for singles and $31,500 for married couples. That’s a lot of "tax-free" income before you even start hitting those percentage brackets.

The SALT Cap Drama

One of the most hated parts of the 2017 law was the SALT cap. It limited your State and Local Tax deduction to just $10,000. If you lived in a high-tax state like New York or California, you were getting crushed.

The new law actually listened to the complaints. For 2025 through 2029, the SALT cap has been raised to $40,000.

It’s a massive win for homeowners in expensive suburbs. However, there’s a catch (there’s always a catch). This higher cap starts to phase out if your adjusted gross income is over $500,000. The government is basically saying, "We’ll give the middle class a break on their property taxes, but the super-rich still have to pay up."

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Why People Think the Income Tax is Gone

The confusion about whether did trump get rid of income tax probably comes from the aggressive rhetoric about "ending the double taxation" of things like Social Security.

As of the latest updates in 2025, Social Security benefits are now exempt from federal income tax. For a lot of seniors living on a fixed income, this feels like the income tax did go away, because Social Security was their primary source of taxable income.

Then there are the "Trump Accounts" for kids. The government is seeding $1,000 into tax-exempt accounts for every baby born between 2025 and 2028. It's a weird, hybrid social-wealth program that makes the tax code feel more like a series of incentives than a straightforward "give us your money" system.

Actionable Steps for Your 2026 Filing

Since the rules changed mid-year in 2025, your next tax filing is going to be a bit of a maze. You can't just copy-paste what you did last year.

1. Track Your Overtime: If you're an hourly worker, keep your pay stubs. You need to prove what part of your check was "qualified overtime" to get that $12,500 deduction.
2. Document Those Tips: The IRS is being strict about the "no tax on tips" rule. You need a written record or a formal report from your employer. If you’re self-employed, sorry, you don’t qualify for this specific break.
3. Check Your VIN: Buying a new car? If you want that interest deduction, make sure the car was assembled in the U.S. You'll actually have to put the VIN (Vehicle Identification Number) on your tax return to claim it.
4. Re-evaluate Itemizing: With the SALT cap moving to $40,000, it might finally make sense to itemize again instead of taking the standard deduction. Run the numbers both ways.

While we haven't seen the end of the IRS, the 2025 reforms have certainly shifted the burden. We’re moving toward a system where "what you do" (working overtime, tipping, buying American) matters just as much as "what you earn." It’s a messy, complicated transition, but for the average worker, it likely means a smaller bill come April—even if the income tax itself is still very much alive.