Trump Wants To Eliminate Income Taxes: 7 Ways That Could Impact Your Job Search in 2025
Written by
G. Brian Davis
Edited by
Jenna Klaverweiden
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It sounds wonderful — no more income taxes sapping your paycheck. And it could be, depending on what replaced them.
“Individual income taxes make up roughly 50% of the federal government’s revenue today,” said Vince DeCrow, founder of RISE Investments.
So if the federal government didn’t collect individual income taxes, it would have to replace that revenue from other sources. And how could it do that?
Two obvious places include tariffs and higher corporate taxes, which raises plenty of implications for labor markets and job searches in 2025. Here are some ways that eliminating income taxes could impact your job search.
Also see 10 major benefits to Americans if Trump ends income taxes, according to GOBankingRates’ president.
More Spending, More Job Creation
Let’s start simple. If President Trump waved a magic wand and income taxes disappeared tomorrow, Americans would have more take-home pay to spend.
“When workers keep more of their funds to live life, it drives growth in all segments of our economy,” explained Hillary Seiler, personal finance expert at Financial Footwork Inc. “That means more jobs, more opportunities and a stronger economy.”
Granted, some of that extra money could get hoovered up by higher-cost goods if tariffs inflate prices on some products. But some extra spending juice would likely get through to the economy at large, making for more jobs available.
Bump in Discretionary Industries
Americans would also likely spend more on discretionary purchases if they felt flush with cash after dropping the expense of income taxes.
“That alone could drive a significant spike in discretionary spending,” DeCrow said. “It would especially benefit the entertainment, hospitality and travel industries.”
That, in turn, would likely mean more jobs in these industries. Plus, these will likely be jobs that can’t necessarily be replaced by an artificial intelligence algorithm, such as massage therapy and other spa treatments, wait staff at upscale restaurants, and human tour guides.
Bump in Real Estate Values and Industry
When people have more money to spend, they bid up home prices.
Seiler pointed to states like Florida and Texas that have attracted many new residents over the last decade by touting their lack of income taxes. “When demand explodes, so do costs. Housing prices have gone up exponentially,” she said.
That works out fine for existing homeowners, but it doesn’t make it any easier for first-time buyers to get a foot in the door.
Still, a thriving real estate market can create a massive number of jobs. Consider all the subindustries in real estate: homebuilding, real estate sales, appraisals, home inspections, title companies, property management, repair and renovation contracting, home decor and furniture, and more.
Lower Demand for Accountants and Income Tax Support
Every major economic change creates winners and losers. Personal income tax preparers and support services, such as accountants and software sellers, fall into the latter category.
If no one needs to file individual income tax returns anymore, that would slash demand for accountants. The country will still need CPAs but largely to work on corporate tax returns.
The upshot? There would be too many CPAs and not enough work, so many would likely find new careers.
An Extra Hurdle for Self-Employment
Right now, every American has to file a tax return. But if only businesses had to file tax returns, it would create a disincentive for self-employment.
Gig workers paid as 1099 contractors may not be immune, either. They would theoretically still owe FICA taxes to fund Social Security and Medicare. That means they’d still have to file a tax return — unlike W-2 employees.
Unless the government put that burden on contract workers’ employers, that is. Lucas Barcelo, finance and insurance expert at Thrivin, pointed out that could make freelance work even more attractive. “Today, many people feel intimidated by tracking their own self-employment income and write-offs. No self-employment tax worries would alleviate those concerns and allow freedom to work how and where you want.”
Impact on State Income Taxes
Today, 43 states charge income taxes. While they do require that you file a state tax return, these mostly piggyback on your federal tax return. If the federal income tax return disappeared and states still required residents to file tax returns, it would create a huge incentive to move to a state with no income taxes.
Knowing that, many (if not all) states might explore ditching income taxes as well. They could simply raise rates on property taxes and excise taxes.
DeCrow pointed out that such a leveling of the tax playing field might send some transplants moving back home. “Many residents who moved to an income tax-free state may move back to their prior home states in the Northeast and Midwest to be able to spend more time with their families or parents,” he said.
Reshuffling of Employee Benefits
Some employers offer benefits specifically with taxes in mind, such as 401(k) plans. If individual income taxes disappeared, companies might rethink which benefits to offer. And employees may demand different benefits than they do today.
“Employees focus on benefits that support their goals,” explained Aaron Razon, budgeting and personal finance expert at CouponSnake. “Without taxes to worry about, employees might focus more on comprehensive health insurance, paid time off, childcare benefits, flexible hours and remote work.”
Ultimately, it’s hard to imagine the federal government eliminating income taxes. But if it somehow pulled it off, the effects across the job market would ripple across every industry and worker — both for good and ill.
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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