Trump suggests replacing federal income tax with tariffs. Does the math add up?

President Donald Trump has recently claimed his tariffs will generate so much money that Americans could soon stop paying federal income taxes. But experts say he’s overpromised.“Over the next couple of years, I think we’ll … be cutting income tax — could be almost completely cutting it, because the money we’re taking in is going to be so large,” Trump told service members in a Thanksgiving video. He repeated the idea in a Cabinet meeting Tuesday. “I believe at some point in the not too distant future, you wouldn’t even have income tax to pay because the money we’re taking in is so great,” Trump said. “It’s so enormous that you’re not going to have income tax to pay. Whether you get rid of it or just keep it around for fun or have it really low, much lower than it is now, but you won’t be paying income tax.”This isn’t the first time Trump has promised Americans a windfall from his tariffs, which represent the most extensive levies on foreign products seen in the U.S. in decades. In November, Trump promised Americans $2,000 each from tariff revenue, a pledge that hinges on questionable math .Replacing federal income tax revenue with tariff revenue is even more daunting.The U.S. has collected about $257 billion in tariff revenues so far this year, and $167 billion of that stemmed from tariffs Trump has imposed in his second term. The federal income tax, meanwhile, brought in about $2.4 trillion in 2024, which is more than 14 times what Trump’s second-term tariffs are generating. “It is not remotely possible that tariffs could be used to eliminate the income tax,” said Steve Ellis, president of Taxpayers for Common Sense, a group that tracks the federal budget.The White House did not respond to our request for details on how the math could work. In 2024, individual income taxes accounted for just under half of the federal government’s revenue. The second-largest share, at about 35%, came from payroll taxes, which are withheld from workers’ paychecks to fund Social Security and Medicare. Corporate income taxes came in third, at about 11%. Tariff revenue was way down the list.To replace what the federal income tax currently covers, tariff revenues would need to grow to nearly half of all federal revenue, or about $2.4 trillion. But Trump’s increased tariffs haven’t netted anything near that amount, and they aren’t projected to exceed $260 billion a year as far as the eye can see.If Trump’s tariffs remain in place for all of 2026, they would generate $191 billion in revenue that year, according to the center-right Tax Foundation. If the tariffs remain in place through 2034, the U.S. would take in $256 billion that year, though a pending Supreme Court challenge could jeopardize Trump’s plan. Still, $256 billion a year is peanuts compared with the nearly $2.43 trillion collected in federal income taxes last year.There are several paths to eliminating the federal income tax with the help of tariff revenue, but none of them are palatable.- Borrow more money . The current level of federal revenue already falls about $1.8 trillion short of covering the government’s expenses. Getting rid of income taxes without replacing them with tariff revenues, dollar for dollar, would greatly widen that gap, adding to future generations’ debt burden. - Shrink the federal government . In the 19th century, tariffs funded most of the government, Ellis said. But the government was much smaller then, and Americans today show no appetite for giving up benefits they’re accustomed to, from Social Security to Medicare to a muscular military. - Increase tariffs enough to equal income tax revenue . That would mean setting tariff rates “incredibly high — well over 60%,” said Douglas Holtz-Eakin, president of the American Action Forum, a center-right think tank. Tariffs that big, he said, would “radically distort production and purchase patterns and diminish the amount of imports. As a result, tariff rates would have to rise further.”The idea of switching from a largely income-based tax system to one that’s more dependent on consumption has been debated for decades. Many European countries levy a value-added tax, which is essentially a sales tax broken into several pieces at various stages, from a product’s creation to its final sale.This idea faces challenges in the U.S. Many states already tax retail sales, so a new federal tax layered on top would pose an extra burden, especially for lower-income families who have to spend larger percentages of their income than wealthier families do (and who often pay relatively little in federal income tax under the current system).The sales tax “would have to be around 40%, and there would be a lot of evasion at that rate,” said Dean Baker, co-founder of the liberal Center for Economic and Policy Research.

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