In a major policy proposal that could reshape the future of American taxation, President Donald Trump is considering a bold plan to eliminate federal income taxes for Americans earning less than $150,000 per year, provided the federal budget is balanced. The move, if enacted, would amount to one of the largest middle-class tax relief efforts in U.S. history.
The idea was revealed by Commerce Secretary Howard Lutnick, who confirmed that Trump’s long-term goal is to dramatically reduce the tax burden on working Americans while revitalizing economic growth and restoring fiscal discipline.
Massive Tax Relief for Millions of Americans
Under Trump’s proposal, individuals making less than $150,000 annually—which accounts for roughly 85% of U.S. taxpayers—would no longer pay any federal income tax once the government achieves a balanced budget.
The plan also includes:
- Eliminating taxes on tips
- Ending taxes on overtime pay
- Exempting Social Security benefits from federal taxation
Trump’s proposal is aimed squarely at hardworking middle-class families, hourly workers, small business employees, and retirees—Americans who have been crushed by years of inflation, stagnant wages, and bloated federal spending.
Replacing Income Taxes with Tariff Revenue
To offset the lost tax revenue, Trump plans to reintroduce the concept of reciprocal tariffs—a strategy used prior to the creation of the IRS in 1913.
According to Secretary Lutnick, Trump believes tariffs on foreign imports could generate upwards of $700 billion annually, enough to offset a significant portion of federal income tax revenues. The strategy would make foreign countries pay their fair share while encouraging the repatriation of manufacturing and jobs to the U.S.
“President Trump is going to flip the tax code on its head,” Lutnick said. “He’s focused on empowering American workers, not penalizing their productivity.”
Bringing Back Fiscal Responsibility
The plan hinges on achieving a balanced federal budget, something not seen since 2001. Trump’s team has vowed to implement spending cuts, agency consolidation, and government efficiency reforms to make that possible.
In previous administrations, budget balancing was little more than a political talking point. Under Trump, it’s a strategic foundation for sweeping reform—and a direct path to major tax relief for American households.
Abolishing the IRS?
This proposal also aligns with Trump’s broader goal to scale back or eliminate the IRS, an agency that many conservatives see as bloated, unaccountable, and weaponized against political opponents.
By shifting to tariff-based revenue and simplifying the tax code, Trump’s vision could dramatically reduce the need for the IRS as it exists today.
The Bottom Line
President Trump’s proposal to eliminate income taxes for those earning under $150,000 is a bold, populist move that puts America’s working and middle class first. It’s a plan grounded in historic precedent, powered by economic nationalism, and built on common-sense fiscal principles.
As usual, Trump is proving he’s not afraid to challenge the status quo—and he’s doing it to put more money in the pockets of American families.
Commerce Secretary @howardlutnick says eliminating income taxes is a real possibility?
“I’m in the car with [@realDonaldTrump] … I said ‘I have one favor to ask you, if we can balance the budget for you, will you agree to waive all income taxes for every person who makes less… pic.twitter.com/aDnXcY2KbN
— Trump War Room (@TrumpWarRoom) March 21, 2025