Trump says he may cut income tax ‘completely’ because tariff revenue will be ‘so large.’ Here’s how the math adds up

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They say death and taxes are life’s only certainties — but according to U.S. President Donald Trump, a significant portion of the latter could be on the chopping block.

Speaking to U.S. military service members last week, Trump floated the idea of eliminating income taxes entirely, funded by what he described as massive new tariff revenues.

“Over the next couple of years, I think we’ll substantially be cutting and maybe cutting out completely, but 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,” he said (1).

It’s a bold proposal, especially given that income tax is the federal government’s single largest source of revenue.

In fiscal year 2025, the federal government collected $2.656 trillion in individual income taxes — about 50.7% of Uncle Sam’s total $5.235 trillion in receipts (2). By comparison, corporate income taxes brought in $452 billion and tariff revenue totaled just $195 billion.

Critics quickly pointed out the gap.

Economist Erica York of the Tax Foundation said the math simply doesn’t work — nor would Trump’s vision be easy to implement.

“Mathematically impossible, plus any income tax cuts would require Congress,” York wrote on X (3).

“To replace the roughly $2 trillion of revenue raised by the individual income tax with tariffs would require astronomically high tariff rates. And those rates would shrink imports, making it impossible to generate enough revenue to replace the income tax (4).”

It’s also worth noting that even with income tax revenue, the federal government still spent far more than it brought in: $5.235 trillion in total receipts versus $7.010 trillion in outlays, leaving a $1.775 trillion deficit in fiscal 2025.

While Trump’s proposal faces serious doubts, policy changes aren’t the only route to lowering tax bills. Here are two powerful assets that everyday investors can use to their advantage — the same ones the wealthy have leaned on for decades.

Scott Galloway, professor of marketing at New York University’s Stern School of Business, once said that if you’re trying to build wealth, you have “an obligation to pay as little tax as possible.”

His advice? Keep it simple: “You buy stocks, you never sell them, you borrow against them.”

Galloway broke it down with an example: “You own $100 in Amazon stock. You need money to buy something. Instead of selling the stock, and let’s say it’s gone up 50% … You would have to realize a capital gain and pay long-term capital gains [tax] on that $50 gain. No, just borrow against it and let the stock continue to grow.”

This strategy allows investors to tap into the value of their portfolios without triggering a taxable event. Because capital gains are only taxed when realized, borrowing against appreciated assets lets investors access cash while deferring taxes.

Meanwhile, the investments themselves can continue to grow. And since the interest on the loan is often smaller than the tax bill from a sale, this approach can be a powerful tool for preserving and compounding wealth over time.

Read more: Warren Buffett used 8 solid, repeatable money rules to turn $9,800 into a $150B fortune. Start using them today to get rich (and stay rich)

Of course, not all investors want to pick individual stocks — and you thankfully have other options. Warren Buffett, one of the most successful investors of our time, recommends a much simpler path: invest in the S&P 500.

“In my view, for most people, the best thing to do is own the S&P 500 index fund,” Buffett has famously stated (5). This approach gives investors exposure to 500 of America’s largest companies across a wide range of industries, providing instant diversification without the need for constant monitoring or active management.

The beauty of this approach is its accessibility — anyone, regardless of wealth, can take advantage of it. Even small amounts can grow over time with tools like Acorns, a popular app that automatically invests your spare change.

Signing up for Acorns takes just minutes: link your cards and Acorns will round up each purchase to the nearest dollar, investing the difference — your spare change — into a diversified portfolio. With Acorns, you can invest in an S&P 500 ETF with as little as $5 — and, if you sign up today, Acorns will add a $20 bonus to help you begin your investment journey.

Real estate has long been a go-to asset for building wealth — and one of the reasons is the generous tax treatment it receives.

When you earn rental income from an investment property, you can claim deductions for a wide range of expenses, such as mortgage interest, property taxes, insurance and ongoing maintenance and repairs.

Real estate investors also get to use depreciation — a tax deduction that recognizes the gradual wear and tear of a property over time.

Today, you don’t need to be a millionaire or buy property outright to benefit from real estate investing. Crowdfunding platforms like Arrived, for instance, offer an easier way to get exposure to this income-generating asset class.

With Arrived, you can invest in shares of rental homes with as little as $100, all without the hassle of mowing lawns, fixing leaky faucets or handling difficult tenants.

The process is simple: browse a curated selection of homes that have been vetted for their appreciation and income potential. Once you find a property you like, select the number of shares you’d like to purchase and then sit back as you start receiving any positive rental income distributions from your investment.

Another option is First National Realty Partners (FNRP), which allows accredited investors to diversify their portfolio through grocery-anchored commercial properties, without taking on the responsibilities of being a landlord.

With a minimum investment of $50,000, investors can own a share of properties leased by national brands like Whole Foods, Kroger and Walmart, which provide essential goods to their communities. Thanks to triple net leases, accredited investors can invest in these properties without worrying as much about tenant costs cutting into their potential returns.

Simply answer a few questions — including how much you would like to invest — to start browsing their full list of available properties.

At the end of the day, everyone’s situation is unique — from investment goals to financial obligations to risk tolerance. That’s where a personalized strategy can make a real difference.

For high-income households, platforms like Range can help identify ways to further reduce their tax burden.

Range is a streamlined, cost-effective way to manage your entire financial life. They offer tax recommendations based on your prior year returns and can evaluate your investment portfolios for tax loss harvesting opportunities, too.

Beyond taxes, Range also offers investment advisory services. While traditional advisors can charge fees from 0.5% to 2% of your total assets under management (AUM), or between $1,000 to $3,000+ for more comprehensive plans, Range offers flat-fee pricing with 0% AUM fees. That’s a fraction of what you’d pay with a typical CFP.

You can even book a free demo with the Range team after answering a few quick questions about yourself and what you’re looking for from their experts.

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

@ForbesBreakingNews (1); Fiscal Data (2); @ericadyork (3; 4); CNBC (5)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.