President Donald Trump is mulling a bold new tax policy that could exempt individuals earning less than $150,000 annually from federal income taxes, U.S. Commerce Secretary Howard Lutnick revealed today.
The proposal, still in its early stages, emerges as part of a broader fiscal strategy being debated within the administration as the landmark 2017 tax cuts near their expiration date at the end of 2025.
Speaking at a press briefing, Lutnick described the potential policy as a cornerstone of Trump’s vision to ease the tax burden on middle- and lower-income Americans.
“The president is seriously considering a plan where if you make under $150,000, you might not pay any taxes at all,” Lutnick said.
“It’s about putting money back in the pockets of hard-working Americans.” The threshold would cover a significant portion of U.S. wage earners, though exact figures on eligibility remain under review.
The proposal comes with a twist: rather than relying solely on domestic revenue, the administration is exploring ways to shift the taxation burden outward.
Lutnick hinted at a novel approach involving what he called a “membership fee” for countries trading with the United States.
“Why should Americans bear all the cost? We’re looking at external sources—think of it like a fee for the privilege of accessing our markets,” he explained, suggesting tariffs or similar levies could offset the loss of internal tax revenue.
The idea aligns with Trump’s long-standing emphasis on trade imbalances and his administration’s aggressive tariff policies during his first term.
Economists estimate that such a shift could generate billions annually, though critics warn it risks escalating trade tensions with key partners like China and the European Union.
Details of the “membership fee” concept remain vague, with Lutnick indicating that Treasury and Commerce officials are still crunching numbers to ensure fiscal viability.
The timing of the proposal is tied to the looming expiration of the Tax Cuts and Jobs Act, enacted in 2017, which slashed corporate rates and provided temporary relief for individual taxpayers.
With those cuts set to lapse, Trump faces pressure to deliver a new economic package that fulfils campaign promises while navigating a divided Congress.
The $150,000 tax exemption could serve as a populist centrepiece, appealing to his base ahead of the 2026 midterms.
Reaction on Capitol Hill was swift but mixed. House Speaker Mike Johnson (R-La.) praised the idea as “pro-worker and pro-growth,” while Senate Minority Leader Chuck Schumer (D-N.Y.) dismissed it as “another giveaway to the wealthy dressed up as relief for the little guy.”
Progressive voices, including Sen. Bernie Sanders (I-Vt.), argued that the plan fails to address systemic inequality unless paired with wealth taxes.
Economists are already debating the feasibility.
A tax exemption for incomes under $150,000 could reduce federal revenue by hundreds of billions annually, potentially ballooning the deficit unless external funding proves robust.
“The math has to work,” cautioned Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “Relying on trade fees sounds innovative, but it’s a gamble with global consequences.”
