President Donald Trump is pushing for a dramatic shift in the U.S. tax system—his bold proposal to eliminate the IRS and abolish federal income taxes. Instead of relying on income taxes, Trump’s plan suggests replacing this $3 trillion revenue with high tariffs. But how much more would you actually take home if you earn $100,000 a year under this new plan? The answer might surprise you!
Currently, if you’re making $100,000 annually, you fall into the 22% tax bracket, but the tax system is progressive, meaning you only pay 10%, 12%, and 22% on different portions of your income. For 2025, your effective tax rate is around 13.61%. This means you’d keep an additional $13,614 annually if the income tax is eliminated. That’s a hefty amount that could certainly boost your wallet!
But before you get too excited about the extra cash, there’s a catch: tariffs. While your income tax might disappear, the money you save could be quickly eaten up by higher prices for goods. Since tariffs are essentially a tax on consumers, businesses would likely pass the additional costs onto you. Experts predict that the average American household could face an extra $2,100 in costs for goods in 2025.
And it’s not just small purchases that could hit your budget hard. Major items like cars are expected to see significant price hikes under Trump’s tariffs. Some American vehicles could go up by $2,500 to $5,000, while imported models might spike by $20,000 or more.
From groceries to electronics, everything you buy could come with a higher price tag. So while you might be pocketing more from your salary, those savings could be quickly wiped out by the rising costs of everyday goods.
