By Leada Gore
President Trump has indicated he’d like to do away with the federal income tax, replacing it with tariffs and other taxes on foreign nations.
What would that mean for the average taxpayer?
In a January speech, the president referenced the idea saying the U.S. economy was stronger before a national income tax.
“We had no income tax. The income tax came in 1913. As I said in my speech last week, instead of taxing our citizens to enrich foreign nations, we should be tariffing and taxing foreign nations to enrich our citizens,” Trump said, according to a report on Fox Business.
“It’s time for the United States to return to the system that made us richer and more powerful than ever before,” he said. “You know, the United States in 1870 to 1913, all tariffs. And that was the richest period in the history of the United States, relatively speaking.”
In 2023, U.S. Treasury data shows federal income taxes accounted for $4.92 trillion.
What would paychecks look like without a federal income tax?
GoBankingRates.com analyzed what checks and income would look like in each state if federal income taxes were abolished.
According to the data, Alabama’s figures are:
- Median household income – $50,536
- Total income taxes for single filers – $12,264
- State income tax for single filer – $2,911
- Bi-weekly check with all taxes – $1,472
- Bi-weekly check with no federal tax – $1,872
The difference would be an extra $360.
The figures come from the 2023 American Community Survey of median household figures and income tax estimates for a single filer using the standard deduction. You can see more on the methodology here.
Other states would see higher savings. In California, where median household income is $73,235, the cut would save some $723. In Hawaii, eliminating federal income tax would save $758 bi-weekly.
