President Donald Trump has stated multiple times that he wants to eliminate income taxes and replace them with tariffs. Such a decision would be one of the most significant changes to the tax code in decades, and it could help Americans save a lot of money.
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The government still needs to collect funds, so the tax code could shift to a combination of tariffs and sales tax. However, even if the IRS isn’t eliminated, Trump has floated the idea of no one paying taxes if they earn less than $150,000 per year.
Here’s how much you could save if Trump eliminates income taxes.
According to the TaxAct tax bracket calculator, a single person would have an effective tax rate of 16.83% on a $150,000 salary in 2025. This doesn’t include the FICA tax, which funds Social Security and Medicare.
Someone who earns $150,000 per year would pay about $25,500 in federal income taxes. That’s how much you would save if Trump eliminated income taxes.
The only way you’ll get ahead on the proposal is if you don’t have to pay more than that $25,500 on any extra sales tax or tariffs. People who don’t buy as many goods and services are more likely to save money with this model if they are earning $150,000 per year.
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Trump only has control over federal taxes, but you can decide where you live. Each state has a different tax code. Some states have progressive tax rates, while others charge a flat income tax across the board.
You can also save money by living in a state that doesn’t have any income tax. These are the states that currently do not tax your income:
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Alaska
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Florida
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Nevada
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South Dakota
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Tennessee
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Texas
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Washington
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Wyoming
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New Hampshire
Mississippi is phasing out its state income tax, and there is some speculation that Ohio could be the next state to eliminate income taxes. Some lawmakers are looking to get rid of the tax by 2030, and Vivek Ramaswamy, who is running for governor in Ohio, has suggested that he will eliminate Ohio state income taxes if he takes office.
The government still needs money for its operations, and it may turn to the money printer for some help. This scenario could boost inflation and reduce the purchasing power of every dollar.
