If America Got Rid of Income Tax: Would Your $100K Salary Really Feel Like a Raise?

Trump’s proposal to get rid of income tax and dismantle the IRS has ignited debate about what ordinary Americans might actually pocket. The pitch sounds straightforward: eliminate federal income taxes, replace the roughly $3 trillion in annual revenue through aggressive tariffs, and let workers keep more of their paycheck.

But here’s where it gets complicated.

The Math: Your Potential Windfall

Earning $100,000 annually places you squarely in the 22% tax bracket, but thanks to progressive taxation, your actual bite is smaller. Using 2025 tax calculations, the effective rate works out to approximately 13.61% — meaning you’d see about $13,614 extra in annual take-home pay if income tax disappeared overnight.

That’s not pocket change. For many households, an extra $1,134 monthly could meaningfully reshape budgets.

However, this calculation excludes FICA obligations (Social Security and Medicare contributions), which vary based on employment classification — whether you’re a traditional W-2 employee or navigate self-employment tax responsibilities.

The Hidden Cost: Tariffs as a Shadow Tax

The uncomfortable truth is that replacing $3 trillion in federal revenue requires tariffs substantial enough to shift the tax burden elsewhere.

Research from the nonpartisan Tax Foundation suggests the average American household faces an additional $2,100 in annual spending by 2025 simply from import tariffs. This functions as a de facto consumption tax hitting consumer wallets across nearly every category.

Vehicle prices could absorb particularly punishing increases. Domestic vehicles may climb $2,500 to $5,000, while imported models could jump $20,000 or more. Beyond automobiles, price pressure would cascade across clothing, footwear, technology, household appliances, food staples, furniture, and building materials.

The Reality Check

That $13,614 annual windfall could evaporate quickly. A family purchasing a new car faces immediate costs exceeding any tax savings. Even modest consumer spending on imported goods — electronics, appliances, seasonal items — compounds throughout the year.

The political math remains unresolved. Constitutional authority for taxation rests with Congress, creating implementation obstacles beyond executive action.

The essential takeaway: while eliminating income tax sounds liberating, the accompanying tariff structure designed to offset federal revenue loss would simultaneously inflate living costs for ordinary earners. Any tax relief becomes theoretical when the cost of goods spirals upward.