Proposal to Eliminate Federal Income Taxes for Americans Earning Less Than $150k

There’s a new financial idea circulating out of Washington, and it’s got everyone talking—especially those of us who keep a close eye on tax policy. Commerce Secretary Howard Lutnick, under President Donald Trump, has proposed eliminating federal income taxes for Americans earning $150,000 or less. This would impact a whopping 92% of individual earners and 75% of U.S. households.

Sounds incredible, right? Let’s break down what that could really mean—and what trade-offs might come with it.

What It Means for Everyday Americans

If you’re earning $150,000 as an individual, you’re currently in the 24% marginal tax bracket. For a married couple filing jointly, you’re in the 22% bracket. Eliminating income taxes for these groups could result in massive savings:

• Individuals: Save over $25,000 a year, or about $2,000/month.
• Married couples: Save over $16,000 a year, or $1,300/month.

That kind of financial boost could mean more room to save, invest, pay down debt, or even take a vacation without stressing about your budget. In theory, this would be a huge win for the middle class.

But How Would the Government Make Up the Difference?

Here’s where things get complicated.

Households earning under $200,000 currently contribute 41% of all federal income taxes, and those earning under $100,000 contribute about 10–15%. Eliminating those contributions would blow a major hole in government revenue.

Secretary Lutnick’s solution? Replace the Internal Revenue Service with what he calls an “External Revenue Service”—in other words, tariffs on international trade.

The idea is to make foreign countries help fund our economy since we buy so many of their goods and services. It sounds patriotic, but it’s also a big gamble.

Tariffs: Who Really Pays?

On paper, tariffs seem like a great solution—shift the tax burden from Americans to other nations. But here’s the reality: when tariffs go up, imported goods become more expensive, and American consumers foot the bill.

So, while you might save money on your taxes, you could end up paying more at the grocery store, the hardware store, and even when buying a car or electronics. In short, the cost could circle right back to you.

What About Higher Earners?

If this plan moves forward, those earning over $150,000 may still pay income taxes—possibly at higher rates. That raises questions:

• Would high-income earners face a heavier tax burden?
• Would this discourage people from striving to earn more?
• Could it widen the economic divide or disincentivize productivity?

It’s something we all need to think about, regardless of which side of the income line we fall on.

Let’s Talk About It

I know a lot of people love the idea of paying zero federal income taxes. Who wouldn’t? But before we pop the champagne, we have to understand the trade-offs.

Personally, I think this kind of conversation is worth having, even if the proposal isn’t law (yet). I want to hear from you:

• Would you trade income taxes for tariffs?
• Do you think this plan is fair?
• How do you see it impacting your household?

Leave your thoughts in the comments—I’d love to start a conversation around this.

All writings are for educational and entertainment purposes only and does not provide investment or financial advice of any kind.