Trumps Plan to Abolish the IRS has Just Begun
President Trump’s latest tax reform initiative proposes the most dramatic overhaul of the U.S. tax system in a century, centered on eliminating the IRS and replacing it with a tariff-based revenue service. The One Big Beautiful Bill Act, currently in motion, marks an ambitious attempt to simplify taxation and stimulate economic growth. The IRS budget is already being cut, with 25,000 employees laid off, signaling a broader restructuring. Historically, tax law changes have triggered public backlash, but Trump’s team argues the reforms aim to empower individuals and small businesses to leverage deductions and retain more of their income. The proposal to replace income taxation with tariffs revives one of the founding ideas of the American tax system collecting government revenue from imports rather than citizens.
In 2025, tariffs are expected to generate a record $300 billion, yet that amount represents only a fraction of the projected $5 trillion in total U.S. tax revenue and cannot fully replace the IRS’s collection capacity. The government still faces a $2 trillion deficit, with total spending expected to reach $7 trillion this year. America’s tax structure remains heavily dependent on income, payroll, sales, capital gains, property, and corporate taxes. While spending cuts and new tariffs may offset some deficits, experts warn that lower tax rates under the new act could expand the deficit by an additional $3 trillion over the next decade. For individuals, the new bill introduces a variety of tax breaks aimed at stimulating spending and rewarding work.
Car loan interest payments up to $10,000 are now deductible for vehicles purchased between 2025 and 2028.
Those earning under $150,000 can exclude up to $25,000 of tips from taxable income, and overtime pay up to $12,500 for single filers ($25,000 for married couples) is now tax-free.
The Tax Cuts and Jobs Act, initially set to expire, is made permanent, maintaining lower rates for most households.
Business owners also benefit from sweeping incentives: a 100% Section 179 deduction allows companies to fully write off machinery in the year of purchase, while the 20% qualified business income (QBI) deduction becomes permanent for small business owners.
However, Section 2740 eliminates meal deductions for employees, making food and beverage expenses personal rather than business write-offs. The new tax framework also extends corporate benefits, keeping the corporate tax rate at 21% rather than reverting to 35%. A company with $100,000 in profit would owe $21,000, leaving $79,000 post-tax. C corporations still face double taxation, paying both corporate and shareholder-level taxes, but the lower rate reduces the overall burden.
Employee-focused reforms include a permanent tax-free employer subsidy for student loan repayment, meaning companies can help employees pay down student debt without triggering taxable income. This move aims to attract and retain skilled workers while addressing America’s $1.7 trillion student debt problem. The cumulative effect of these changes lower taxes for individuals, expanded business deductions, and stable corporate rates creates both opportunity and risk. While consumers and entrepreneurs stand to gain from higher after-tax income, reduced government revenue deepens the national debt, now surpassing $37 trillion. To offset this, President Trump has hinted at unconventional proposals, including backing portions of U.S. debt with gold and cryptocurrency, an idea intended to strengthen the dollar and stabilize long-term fiscal policy.
Whether the One Big Beautiful Bill succeeds will depend on balancing tax relief with fiscal responsibility. For now, it represents a historic shift toward a tariff-driven economy designed to reduce bureaucracy, reward productivity, and reshape how America pays its bills.
Jaspreet Singh is not a licensed financial advisor. He is a licensed attorney, but heis not providing youwith legal advice in this article. This article, the topics discussed, and ideas presented are Jaspreet’sopinions and presented for entertainment purposes only. The information presented should not beconstrued as financial or legal advice. Always do your own due diligence
