Former President Donald Trump’s tax reform proposal could offer full or partial income tax exemptions to around 93.2 million Americans, according to estimates analyzed by CNBC.
Trump’s plan includes eliminating income taxes on tips, Social Security benefits, and overtime pay. Additionally, in a recent interview, he said he’s considering tax exemptions for police officers, firefighters, military personnel, and veterans.
This tax overhaul is part of Trump’s larger vision to shift away from income taxes, replacing them with revenue from tariffs. He has proposed a universal 20% tariff on all imports and a 60% tariff specifically for Chinese goods.
While Trump’s plan may appeal to millions of voters, tax experts have questioned the feasibility of replacing income tax revenue with tariffs.
Analysts from the Tax Foundation estimate that tariffs would generate around $3.8 trillion over the next decade, falling far short of the $33 trillion projected from income taxes during the same period.
Trump’s proposal would potentially impact millions, including Social Security beneficiaries, tipped workers, veterans, active-duty military personnel, police officers, and firefighters. Together, these groups account for about 38% of the 244 million Americans eligible to vote in 2024.
The Tax Foundation estimates that the proposed tax exemptions on tips, overtime pay, and Social Security benefits would result in a $2 trillion reduction in federal revenue over the next decade. Factoring in Trump’s broader tariff plans and other tax cuts, federal tax revenue could decline by $3 trillion from 2025 to 2034.
However, experts remain skeptical about whether tariffs could fully replace income taxes, with some calling the plan unrealistic. Despite these concerns, Trump’s proposal is likely to resonate with millions of potential voters in the upcoming election.