President Donald Trump recently announced that federal income taxes could see significant reductions — or even be eliminated — once the new tariff system is fully in place.
Posting on Truth Social on April 27, Trump said that the primary beneficiaries of these tax cuts would be Americans earning under $200,000 annually.
He also referred to the establishment of an “External Revenue Service,” suggesting a future where the government is funded primarily through tariffs rather than through the Internal Revenue Service’s current tax collection methods.
If federal income taxes were abolished, it could act as a major boost for asset markets like cryptocurrencies, as people would have more disposable income to invest. However, it’s uncertain whether this effect would play out as expected.
Markets and Analysts Skeptical of Trump’s Plan
This isn’t the first time Trump has brought up scrapping federal income taxes — he first hinted at the idea during a guest appearance on the Joe Rogan Experience back in October 2024 while on the campaign trail, though he offered few specifics.
Trump argued that relying on import tariffs could recreate the economic boom the U.S. experienced in the late 1800s, prior to the introduction of a permanent federal income tax.
Research by accounting firm Dancing Numbers suggests that the average American could save approximately $134,809 over their lifetime if Trump’s proposal goes into effect. If other wage-based taxes are also removed, the savings could climb as high as $325,561 per individual.
Earlier this month, on April 2, Trump signed an executive order introducing broad tariffs across all U.S. trade partners, setting a 10% minimum tariff rate and adjusting rates based on the treatment of U.S. exports.
However, the administration has since modified its tariff policies multiple times, creating uncertainty about when the full system will be enforced.
The frequent shifts in trade policy have rattled financial markets, driven up U.S. bond yields, and drawn heavy criticism from economists, many of whom argue that the protectionist measures are damaging market stability without delivering clear economic benefits.
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