Trump's 2026 Tax Cut Proposals Explained

"he wants to make some big changes on one hand Trump says that he wants to use tariffs to reduce or potentially eliminate the income tax"

"number two he wants to extend certain tax cuts which are set to expire in the end of 2025"

"number three the third e encourage businesses to make their products in America by giving them tax incentives"

"three of the biggest proposals that Trump has made when it comes to eliminating taxes are number one eliminating taxes on tips number two eliminating taxes on Social Security benefits and number three eliminating taxes on overtime income"

"because it's a tax that you're paying on money that you already paid taxes on because you're going to work right now and you get paid that salary well you're paying the Social Security tax it's a part of your payroll taxes so you're paying the Social Security tax and then when you go and enter retirement you finally get that money from the government and then the government's going to tax you on the money that they're paying you so it's really a social security income tax because now as you generate that social security income you have to pay that tax and this where president Trump is saying well how about we just remove that tax"

"if you're working overtime you are one of the hardest working Americans out there and if you're one of the hardest working Americans and you're working these extra hours you should be able to keep more of the income for yourself"

"number two is President Trump has talked about extending certain tax cuts in 2017 when Trump was president during his first term he passed the tax cuts and jobs act and that tax cut is set to expire in the end of 2025 unless something changes and this is Trump says he wants to extend that"

"so the question is if these tax cuts don't get extended what would happen to tax rates I'll show you this is what would happen if you make over $1,900 your tax rates are going to go up the marginal tax bracket rates would go up in almost all brackets except the lowest tax bracket and then this tax bracket right here where it would stay at 35% so this will go from 12% to 15% 22% to 25% 24% to 28% 32% to 33% 35% would stay the same right here and then this would go from 37% to 39.6%"

"but this where Trump says that he wants to extend the tax cuts and jobs act that way these tax rates don't go back up"

"if you make your products in a foreign country you might be subject to a tariff tax this tariff tax means that if you're a business manufacturing things in China you might have to pay an additional tax now to produce that product which means that it's going to be more expensive for you to produce that product"

"he's going to reward you by producing the product in America through tax cuts by producing that product in America what that looks like to me as a random guy on YouTube is giving businesses who produce products in America a better chance to be able to compete against businesses who produce their products in a foreign country by offering them number one the ability to not pay the tariff tax and then the ability to save money on taxes"

"the current corporate tax rate is 21% he wants to extend the tax cuts and jobs act which would keep the corporate tax rate at 21% so it does not go up to 35% but he wants to make it Amendment which says that if you own a business that makes your products in America instead of 21% you pay 15%"

"while the businesses that are producing products overseas still have to pay 21% as their reward to make your product in America a tax incentive to make your product in America and then if you make a product in a foreign country you also have to pay a tariff on top of that"

"if the government is collecting less money in taxes and they don't change their spending well now you can start to see a problem if you make less money but your costs stay way up here you have to make up that cost somehow and the governments have been doing that in the form of debt"

"if the government reduces tax income while not cutting their expenses well that's going to put us into deeper debt"

"the government can cut taxes in the hopes of trying to grow the economy to raise the taxable income to raise a taxable base to keep expenses up here which could help make up some of the Gap"

"the government has been making $100 and then spending $200 which you can see why that's a problem"

"consequences to the government spending a lot of money that means you have to pay more money in taxes that means more their tax dollars could be used just to pay off the interest on that debt as opposed to providing any value to you or other taxpayers and citizens"

"it could also mean that inflation becomes a bigger problem because of the government is going deeper and deeper into debt to spend a whole lot of money well that money printing that is done could create more inflation"

"benefits of the government spending money which is they could create jobs"

"if the government starts cutting their expenses there's a consequence to that the consequence to that is well people could be losing their jobs we've heard of government layoffs happening"

"president Trump is now considering getting rid of the income tax"

"instead of taxing our citizens to enrich foreign Nations we should be tariffing and taxing foreign Nations to enrich our citizens"

"the fair tax act of 2025 was a bill proposed which would effectively abolish the IRS"