Trump Wants To Eliminate Income Taxes: 4 Ways This Could Impact Your Side Gig
Written by
T. Woods
Edited by
Amber Barkley
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President Donald Trump has said he is considering abolishing the Internal Revenue Service (IRS), and replacing it with what he calls the External Revue Service (ERS). Per CNN, the IRS generates $3 trillion in annual income tax revenue, and Trump hopes to earn that same amount with the ERS via imports and steep tariffs placed upon trade partners.
While many Americans would likely rejoice at the thought of no income taxes, how would this impact those with side gigs?
According to Side Hustle Nation, 39% of American workers — approximately 80 million people — reported having a side gig to supplement their income in 2024. That’s 80 million Americans who would be uniquely impacted by the abolition of the federal income tax.
No More Paying the Government
Since freelancers and independent contractors receive untaxed payments for their work, they have to file a Form 1099-K or 1099-NEC come tax time and pay all their taxes upon filing, rather than have taxes taken from their checks. It can be a costly, stressful experience.
If there are no income taxes, side hustlers could simply keep everything they’re paid, without worrying about budgeting for a potentially-high tax payment when they file.
No More Tracking Quarterly Estimated Payments
The IRS strongly recommends 1099-ers to submit quarterly estimated payments throughout the year to avoid penalties. Freelancers should estimate how much money they will owe during tax season and make quarterly payments on that estimated amount.
Without income taxes, those with side hustles would no longer have to calculate an estimate of their overall yearly income and make quarterly payments on that assumed number.
No More Side Hustle Deductions
While no more taxes or quarterly payments would certainly be celebrated by most folks working a side hustle, one downside to no income taxes would be the absence of side hustle deductions. The IRS allows independent contractors — who meet its qualifications — to deduct some gig-related expenses from their taxes, such as home office expenses, internet and phone bills, vehicle mileage and tools and materials.
Without the IRS, there would be no regulating entity allowing such deductions, and independent contactors would have to be out-of-pocket for these items.
Potential Cost Increases
With increased tariffs serving as the plan to replace lost revenue from income taxes, many experts believe the prices of various goods would increase. If your side gig requires purchasing supplies or items to resell, you could end up with higher costs to keep it running.
As GOBankingRates previously reported, these tariffs are likely to benefit mostly wealthy Americans, while lower- and middle-income Americans — those more likely to need a side gig to cover costs — miss out on much of the reward while still paying the higher prices. Whether the saved income from a lack of taxes would outweigh the increased costs of maintaining your side gig will only be clear in time.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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