Goodbye to taxes if you earn less than $150k? This is Trump’s latest tax proposal and how it would affect you

There are plenty of people out there who would love to pay fewer taxes and take home more of their hard-earned cash, and U.S. President Donald Trump is hoping to make that happen via a radical new proposal.

Trump proposes to abolish federal taxes: who would be affected?

The Trump administration have put forward several tax plans, including no taxes on tips, overtime and Social Security payments, and even no federal income taxes for people earning less than $150,000.

According to the U.S. Census Bureau, 93% of Americans over the age of 15 made less than that figure in 2022, so almost all of the country’s residents would benefit in terms of the money that goes straight into their pockets. Under the proposal, Americans would still pay state and local taxes, as well as Social Security and Medicare.

“Instead of taxing our citizens to enrich foreign nations we should be tariffing and taxing foreign nations to enrich our citizens,” Trump claimed. “Does that make sense? Right?”

How much would you save if federal taxes were abolished?

If federal taxes were abolished, those who earn more will gain more, SmartAsset’s Director of Economic Analysis Jaclyn DeJohn explained to Newsweek.

“Because federal marginal tax rates increase as you earn more income, someone in the 24% tax bracket stands to gain more than those in the 22% tax bracket, who in turn stand to gain more than those in the 12% or 10% income bracket,” says DeJohn. “

“For example, someone earning $149,000 would save an estimated $25,300 on their federal taxes - an effective savings of about 17.0% per year. Someone earning $49,000 would stand to save about $3,896 annually on their federal taxes, or an effective rate of about 8.0%”.

How exactly much you would save, however, depends on where you live, how much you earn and the tax structure in your area. There are a number of online calculators (SmartAsset, IRS, jacksonhewitt.com) that can help you work out the estimated figure.

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