Is Trump Getting Rid of Income Tax? Tax Reform Plans, Explained
Thank the Public debate rug. You’ve seen the headlines, memes, and TikToks shouting, “Trump is killing the income tax!” Sounds incredible, right? Picture a paycheck showing the full amount, with no deductions for Uncle Sam. The idea of a tax-free paycheck is thrilling, and it travels fast online. But before you start dreaming of that “extra” cash, we need to hit the brakes. The truth is a lot messier than any catchy post. U.S. tax policy doesn’t change with a single order from the President. It requires new laws, a crowded Congress to argue and vote, and often, years of compromises.
In this article, we’ll break down:
What Trump has actually proposed (and what’s just campaign talk).
What the new One Big Beautiful Bill (OBBB) is all about.
Whether federal income tax is really disappearing, or if it’s here to stay for the foreseeable future.
Trump’s Big Tax Promises
Donald Trump loves making “big” promises, and tax cuts are one of his all-time favorites. Over the years, he’s tossed around some pretty audacious ideas:
Scrap federal income tax for people making under $150,000.
Axe taxes on tips, overtime, and your Social Security checks.
Ditch income tax completely and fund the government with big tariffs on stuff we import.
At first glance, this sounds like a dream for your paycheck: less tax, more cash in your pocket. The problem? So far, it’s just talk. These ideas pop up at campaign rallies and speeches, but they aren’t actual laws. Any real change has to go through Congress, and we all know how slow that can be.
So if you’re daydreaming about your 2026 paycheck being all yours, the plain truth is that it’s not going to happen right now.
What Is the One Big Beautiful Bill (OBBB)?
In July 2025, President Trump signed the One Big Beautiful Bill, or the OBBB, while calling it “a historic moment the likes of which no one has ever seen.” The name alone grabbed everyone’s attention, and Twitter didn’t hold back, with comments like “Bye-bye income tax forever!”
Sounds like a blockbuster, right? The reality is a little more boring. The OBBB doesn’t throw the income tax out the door. Instead, it tweaks the tax rules and extends a few of the goodies from the 2017 Tax Cuts and Jobs Act, aka the TCJA.
So what’s really in this bill? Here’s the quick rundown:
First, it locks in the TCJA tax brackets for good. That means the rates—from 10% to 37%—aren’t going to vanish or change in 2025 like they originally planned.
Second, it bumps up the standard deduction. That’s good news for anyone who doesn’t track every little deductible expense, since it lowers the taxable income right off the bat.
Finally, the OBBB rolls out some new tax goodies, including–
A credit for tipped workers that takes a bit of taxable income off the books for folks in the restaurant and service industries.
A senior relief credit aimed at allowing retirees to hold on to more of their monthly budget.
Expanded child-care credits that put a little extra cash in the wallets of families juggling diapers and daycare.
The latest budget proposal floats tariffs and consumption taxes as possible future revenue sources but stops short of actually implementing them.
The biggest takeaway is that you’ll still be filling out your federal income tax return come 2026 and beyond. This is an update, not a brand-new system.
Proposals vs. Reality
Campaign speeches are filled with catchy sound bites that are easy to remember. Who wouldn’t want to hear, “No more income tax!”? It feels like the promise of a lifetime. But let’s talk about reality in simple words.
Former President Trump is proposing to slash income taxes, and he’s even dropped hints about someday eliminating them completely. Still, that day isn’t in the calendar yet.
The government relies on the income tax to pay its bills. It’s the biggest part of the budget, collecting more than $3 trillion every year. Get rid of it, and programs you depend on—Social Security, Medicare, defense—would run into a serious cash crisis.
Switching away from the income tax isn’t straightforward. Alternatives like a national sales tax or higher tariffs sound easy on paper, but they would raise prices across the board. Lower- and middle-income families would feel the pinch the worst.
The promise of a tax-free paycheck is appealing, but the numbers and the political reality show a much trickier picture.
Could Income Tax Really Disappear?
Sure, it’s fun to imagine a country where you don’t owe the IRS a dime, but the truth is different and disappointing. Here are the key reasons you shouldn’t plan a tax-free retirement yet:
Imports alone can’t do it. Even if we doubled import duties from China or slapped a big tariff on oil, we’d still come up way short of replacing the $3 trillion that income taxes bring. Tariffs would help, but they wouldn’t come close to closing the gap.
A national sales tax would sting. If lawmakers tried to replace all income-tax dollars with a sales tax, the rate would need to hit 20% to 30% or more. You’d pay that on your morning coffee, on your clothes, and then also on your mortgage and car payment, because sales tax usually gets applied to a long list of services, too.
Vote on it? Are you kidding? Members of Congress understand voters dislike seeing a large tax added right on the cash register. Proposing a rate that steep would end a Senate or House career overnight, adding quite a twist to that tax-cut promise.
Smart money hopes that it doesn’t change. Economists across the board say the income tax is too large a cash cow to let it go dry. They warn we’d face budget disasters, from massive cuts to Social Security, to closing national parks, to huge new debt.
So next time you hear a candidate brag about abolishing the income tax, title that catchy promise to the ‘sounds great in a debate but no chance in the real world’ shelf.
Conclusion
So, is Trump really getting rid of income tax? The short answer is no, at least for now.
The One Big Beautiful Bill (OBBB) did kick the can down the road a bit. Yes, it extended existing tax cuts and threw in some new credits, but it also kept the income tax structure in place. That means you’ll still be filing a tax return for 2026 and probably for years to come.
The best thing you can do is stay in the know and prepare. The OBBB has a few sweet deductions and credits, so look for ways to use them to shrink your tax bill. If the new rules confuse you, consulting a tax pro is a smart call. Making choices based on headlines and campaign speeches can leave you with surprises come April.
Reach out to Dimov Partners today for expert guidance on how new laws may impact your income tax and future planning.