U.S. Commerce Secretary Howard Lutnick told CBS News that President Donald Trump wants to eliminate income taxes for individuals earning under $150,000 a year. This would lift the tax burden from over 76% of Americans, based on Statista data.
However, if you earn more—say, $200,000—you wouldn’t benefit from this plan.
For someone making $200,000 in 2025, after the standard deduction of $15,000 (for single filers), the taxable income would be $185,000. Here’s a breakdown of what that looks like under current tax brackets:
• $11,925 taxed at 10% = $1,193
• $11,925 to $48,475 taxed at 12% = $4,386
• $48,475 to $103,350 taxed at 22% = $12,073
• $103,350 to $185,500 taxed at 24% = $19,596
That adds up to roughly $37,247 in federal income tax—significantly more than someone earning $140,000, who might owe nothing under Trump’s proposed cutoff.
To offset lost revenue, Trump plans to rely on tariffs. His proposal includes taxing imports, launching a new “External Revenue Service” to manage this system, and reducing the role of the IRS. He argues that taxing foreign goods instead of American workers would bring back jobs and factories.
Critics, however, warn this could raise consumer prices, as companies often pass tariffs onto shoppers. Even if income taxes drop, increased costs could eat into those savings.
Regardless of future policy, there are strategies to lower your current tax bill, such as:
• Contributing to a 401(k) or traditional IRA to reduce taxable income
• Using a Health Savings Account (HSA) if eligible
• Relocating to a no-income-tax state like Florida or Texas
These moves can help you maximize your take-home pay—even if you’re above the proposed tax-exempt threshold.
