Episode 48. Trump to Eliminate Income Tax For Business Owners

Is Trump really eliminating income taxes for business owners? The short answer is no, but the One Big Beautiful Bill Act that passed on July 4th, 2025 made MASSIVE tax changes that directly benefit S corporation owners and small business owners right now. In this podcast, I break down exactly what's law versus what's just a proposal, why economists say eliminating income taxes won't work, and the 3 tax strategies for 2026 every business owner needs to know about immediately.

Here's what happened: Trump signed the One Big Beautiful Bill Act into law, and while it didn't eliminate income taxes, it made the 20% qualified business income deduction (QBI deduction) permanent, brought back 100% bonus depreciation permanently, and locked in corporate tax rates at 21%. These are real tax law changes you can use on your 2026 tax return.

Trump has also been saying he wants to completely replace income taxes with tariff revenue. The problem? The federal government collects $2.7 trillion from income taxes - that's 54% of all federal revenue. Tariffs only brought in $195 billion. The math doesn't work. Economists say trying to replace income taxes with tariffs would push the federal deficit to $4 trillion. So don't make business decisions based on something that isn't law.

Here's what you SHOULD be doing: First, the QBI deduction is now permanent, which means S corporation owners can optimize their W-2 salary versus distributions with a long-term tax planning strategy instead of year-by-year guessing. Second, 100% bonus depreciation means every dollar you spend on qualified equipment, vehicles, and machinery is fully deductible in year one. If you've been considering equipment purchases, this is the time. Third, with corporate tax rates at 21% permanently, there's a C-corporation income shifting strategy that can create significant tax savings for S corporation owners in higher tax brackets, but this MUST be done properly with a tax advisor.

If you own real estate in which your business operates, a cost segregation study just became even more valuable. You can reclassify building components to shorter depreciation periods and take advantage of 100% bonus depreciation against your business income.

The bottom line: don't get distracted by the "Trump eliminating income taxes" headlines. Focus on the tax benefits that are ALREADY law and work with a tax advisor to maximize your deductions for 2026. If the income tax elimination proposal ever becomes real legislation, I'll be the first to break it down for you.

🆓  Download FREE PDF: 7 Write-Offs Every S-Corporation Business Owner MUST Know:   https://7taxwriteoffs.com/?el=podcast&htrafficsource=buzzsprout

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Transcript

Setting The Record Straight

SPEAKER_01 0:00

I've been getting asked a lot of questions. Is Trump really eliminating income taxes for business owners? The short answer is no, not yet, but there's a lot more to the story that directly affects your business, and some of it is really good news. So let's cut through the headlines, let's talk about what's actually happening versus what is being proposed. Here's what we're gonna cover. First, I'll tell you what the law actually passed and what is in effect right now. Then we'll talk about what Trump is proposing about eliminating income taxes. Third, I'll break down why economists say it's not gonna work. And trust me, the math is pretty telling. And finally, the most important part what all of this means for your business and exactly what you need to do about it with some tax strategies for 2026 to help you reduce your taxes.

SPEAKER_00 0:47

Welcome to the Tax Reduction Podcast for Money Making Entrepreneurs with Boris Musheev. Boris has helped entrepreneurs across the United States collectively save millions of dollars in taxes with the power of tax planning and advisory. The only way you, the business owner, can save money on taxes is by using proactive tax strategies. And this podcast is all about saving you money on taxes. Boris will share with you in-depth and easy to understand tax reduction strategies that you can implement in your business within 30 days or less. Let's

What Passed Versus What’s Proposed

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jump into today's episode.

SPEAKER_01 1:20

What actually happened? First, let's get this out of the way. On July 4th, 2025, President Trump signed into law something called, get ready for this, one big beautiful act. And yes, that's the actual name. Did this law eliminate income taxes? No. But did it make some massive changes that benefit S corporation owners and other businesses? And we're going to talk about exactly what those are and what you need to do about them in just a few minutes. But first, let's talk about what everyone is buzzing about. What's being proposed. Now, let's talk about what Trump has been saying he wants to do. Starting in late November of 2025 and continuing through December, President Donald Trump has made multiple statements suggesting he wants to completely eliminate federal income taxes. On December 2nd, during a cabinet meeting, he said, and I'm quoting here, at some point in not too long distant future, you won't even have income taxes to pay. His idea replace income tax revenue with tariff, taxes on the imported goods. There was also a proposal floated by Commerce Secretary Howard Lutnick about eliminating income taxes for anyone making under $150,000 a year. Wow. Here's the key thing to

Trump’s No-Income-Tax Idea

SPEAKER_01 2:40

understand. These are proposals and aspirations. They are not law. There's no legislation drafted, no bill in Congress. This is Trump talking about what he liked to do.

SPEAKER_00 2:52

If you have a tax preparer and you do not have a tax advisor, the only way you can save money on taxes is by using proactive tax planning strategies that only a tax advisor can give you. Boris put together a free PDF for you, the business owner. Seven tax write-offs every S Corporation business owner must know. In this PDF, you can find seven tax strategies that you can start using in your business to instantly start saving money on taxes. Click on the link in the description below for a free download.

Why The Math Doesn’t Work

SPEAKER_01 3:23

Why economists say it won't work. Now, I'm a tax guy, not an economist, but I need to share what the experts are saying about this proposal because it directly impacts whether this will happen or not. Here are the numbers. In the last fiscal year, the federal government collected about $2.7 trillion from income taxes. That's 54% of the federal revenue. How much did the government collect from the tariffs? $195 billion. Even it was Trump's aggressive new tariffs, that's still only about 7% of what income taxes bring in. So you need to collect roughly 14 times more in tariff revenue to replace income taxes. The meth just doesn't work unless tariff rates are so high that it would devastate the economy and drastically reduce imports, which would then reduce tariff revenue. Dean Baker from the Center for Economics and Policy Research calculated that trying to replace income taxes with tariffs would push the annual federal deficit to around $4 trillion. That is roughly 13% of the GDP. Even Treasury Secretary Scott Bassent, who's in Trump's administration, has only talked about income tax relief, not complete elimination.

Real Changes: QBI Made Permanent

SPEAKER_01 4:40

What actually passed and what it means for you, the business owner. Alright, now let's talk about what's real and what you can actually use right now. The One Big Beautiful Bill Act made some massive changes that benefit business owners, especially S corporation owners. And this is where you need to pay attention because this affects your 2026 tax return. Number one, the 20% pass-through deduction is now permanent. This is the qualified business income tax deduction, and it was scheduled to expire at the end of 2025. Now it's permanent forever. For S-Corporation owners, this means you can continue deducting 20% of your qualified business income indefinitely. This alone could save you tens of thousands of dollars on taxes per year. Now, what this means for you, you can now build long-term tax strategies around this deduction without worrying about expiring because this fundamentally changes how we think about compensation planning for S corporation owners. We can optimize your W 2 salary versus distributions with long-term view instead of making year-by-year decisions. That's why it's really important that you work with the tax advisor and plan for it. Now make sure to ask your accountant if they're using the QBI deduction on your taxes. Number two, a hundred

100% Bonus Depreciation Forever

SPEAKER_01 6:00

percent bonus depreciation is back and it is permanent. If you buy equipment, vehicles, machinery for your business, you cannot write off 100% of the cost in year one. This was phasing down to 40% in 2025, then 20% in 2026, and it was going to disappear completely. Now, with this one big beautiful act, it's 100% permanent. What this means for you, if you have been considering equipment purchase, this is the time. Every dollar you spend on a qualified equipment is a dollar you can deduct immediately. This is huge for cash flow. And if you own real estate in which your business operates, cost aggregation studies just became even more valuable for you as a business owner. You can reclassify building components through shorter depreciation periods and take advantage of that 100% bonus depreciation and deduct it against your business income using a section 469 grouping rules. Number three, consider C corporation structure for income shifting strategies. This isn't a provision that passed

C Corp Income Shifting Strategy

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in the one big beautiful bill, but with the corporate tax rate staying at 21% permanently and individual rates also being locked in, there is a strategic opportunity for you to do some tax planning. For some S-corporation owners, especially those in the higher brackets, there may be benefits to forming a separate C corporation to shift certain income and take advantage of the lower 21% corporate tax rate. This is called income shifting. And when done correctly, it can create significant tax savings. What this means for you, this is not a do-it-yourself project. This needs to be done properly with substance and legitimate business purpose, or you're going to have problems with the IRS. You need to work with a tax advisor, someone who can evaluate your specific situation with your income and your financial situation, help you determine if it makes sense and if implemented correctly, it will absolutely save you money on taxes. The key word here is properly. Done wrong, this becomes a tax problem. Done right, it can be a powerful tax planning tool. But please do not attempt this without a professional guidance, such as getting yourself a tax advisor. Regarding

Don’t Plan On Proposals

SPEAKER_01 8:10

the income tax elimination proposal, don't make business decisions based on something that isn't law. Yet, I know it's tempting to think maybe I should wait to sell my business until income tax eliminated, but that's speculation, not planning. However, do pay attention if this proposal gains actual legislative momentum, meaning actual bills are drafted and moving through Congress, then we'll have time to strategize. But we're nowhere near that point.

Action Steps For 2026

SPEAKER_01 8:40

The real risk to watch, if Trump continues pushing hard for tariffs as a replacement for income taxes, we could see tariff rates increase significantly. That would raise the cost of imported goods, which affects your input cost if you buy materials and production from overseas. That's the tangible near-term impact to consider. Action steps and what to do next. Here is what I recommend you do. Number one, review your 2026 equipment and capital purchases. With permanent 100% bonus depreciation, accelerating purchases could save you substantial tax dollars this year. Number two, revisit your S Corporation compensation strategy with the QBI deduction right now being permanent. We can optimize your W 2 salary versus distributions with a long-term view. Number three, if you have been putting off a cost segregation study on a property you own, in which your business operates, this is the year to do it. The tax savings can be massive. A hundred percent bonus depreciation is real. Most importantly, stay informed by working with a tax advisor. But don't get distracted by noise. Look, I understand why the Trump eliminating income taxes headlines are everywhere. It's dramatic. It would fundamentally change everything about how we do tax planning. But here is what I know for certain: the one big beautiful bill act has already given business owners substantial permanent tax benefits, and you can take advantage of them on your 2026 tax return. And if the income tax elimination proposal ever becomes actual legislation, trust me, you'll hear it about it from me

Final Takeaways And Resources

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immediately. If you found this helpful, please subscribe to the channel. I break down complex tax topics specifically for S Corporation owners. And remember, if you have a tax preparer, you do not have a tax advisor.

SPEAKER_00 10:33

That's it for today's episode. Be sure to check out the description below for some free tax reduction resources that Boris put together for you. If you're ready to work with a tax advisor on your tax planning, be sure to schedule your call by heading over to www.taxplanningcall.com. That's www.taxplanningcall.com. And be sure to subscribe to our podcast to be notified when the next strategy is released.