7 Ways Trump's Plan to Eliminate Income Taxes Could Impact You

Republican presidential candidate Donald Trump has unveiled a controversial plan to end federal income taxes.

The plan would generate revenue from tariffs on imported goods, thus eliminating the need for income taxes, Trump says.

Many Trump supporters see the effort as a way to grow the economy and eliminate some money stress for millions of Americans. But what would happen if Trump's plan became reality? Here is a look at how the plan could impact you.

It probably goes without saying that if Trump's plan becomes reality, your paycheck is likely to get bigger.

Income taxes can take away quite a bit of your pay. Federal income taxes range between 10% and 37%. The ability to keep that money instead of paying it to Uncle Sam could boost your bank account.

A bigger paycheck is especially appealing in these times of higher prices and inflation.

If you are paying less in income taxes, you will have more money in your pocket and more options for what to do with it.

Besides having an easier time affording food and other necessities, you could use some of that money to improve your overall financial situation.

For example, you could build up a rainy day fund so you are better prepared for emergencies. Or, perhaps you could use the money you save to pay off your debts or to start investing so you can grow your money.

However, there might be some downsides to Trump's plan to eliminate income taxes. The tariffs Trump proposes might mean you would pay higher prices for goods and services.

That could negate many of the benefits of saving money on taxes.

Even if federal income taxes disappear, you would probably feel a new tax squeeze in other places.

For example, sales and property taxes might increase to make up for the reduction in revenues from income taxes.

If income taxes are eliminated, social programs might suffer. Think about how income taxes help support programs such as Medicaid, housing subsidies and food aid.

If eliminating income taxes results in less money going into government coffers, it could mean cuts in social programs or longer service wait times. For people already struggling to afford health care and food, this situation could be especially difficult.

Even if you wouldn't be directly affected by cuts to social programs, there could be a trickle-down effect that hurts others in your community.

For instance, if fewer people are able to qualify for Medicaid or there is a reduction in other aid programs, those people impacted by the changes might need to find other health care or food options. That could impact your doctor's office or places where you shop.

The elimination of income taxes might cause an increase in income inequality. Struggling Americans might be forced to pay a higher percentage of their salaries toward goods and services. That would likely widen the gap between wealthier Americans and those who are less affluent

The richer parts of society might disproportionately gain from the elimination of income taxes, as they are less likely to rely on social programs for assistance.

In addition to Trump's plan to eliminate federal income taxes, other tax changes could be in the works. Project 2025 is the policy plan created by conservative think tank The Heritage Foundation, with support from other right-leaning organizations.

Among the possible tax changes under Project 2025 are that investment taxes would decrease, the net investment income tax (NIIT) would disappear, and estate and gift taxes would fall.

It's important to point out, however, that Trump himself has not publicly embraced Project 2025, so there is no telling whether these changes would happen if he becomes president again.

Trump and some supporters have promoted his plan to eliminate federal income taxes as a way to help lower your financial stress. While it could mean more money in your paycheck, goods and services might become more expensive.

As with most policy proposals, there would likely be both positive and negative effects if federal income taxes disappeared. So, rather than waiting to see if income taxes disappear, work on your own finances by trying to eliminate debt so you can save more.