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Proposal: No Federal Income Tax for Persons Earning $61,000 or Less

No Federal Income Tax or Tax Filing for People Earning $61,000 or Less

Updated July 2026 with the latest IRS, Pentagon, and NEA data.

Summary

This proposal would eliminate federal individual income tax liability for people earning $61,000 or less in total wage income. Simplifying the tax system for tens of millions of working Americans. While having minimal impact on federal revenue. In practical terms, anyone earning approximately $29.33 per hour or less. Would pay zero federal income tax and would no longer be required to file a tax return each year. Payroll taxes , Social Security and Medicare would still be deducted from paychecks as they are today. Beyond that nothing. No additional federal tax withheld. No annual filing requirement.

Rationale

Based on IRS data households earning $61,000 or less. Make up approximately 50 to 60 percent of all U.S. tax filers. Yet this group contributes only 3 to 4 percent of all federal individual income tax revenue. Toughly $70 to $95 billion per year. The most recent IRS data from tax year 2023. Shows the bottom half of all filers . Everyone with income below $53,801. Paid just 3.3 percent of all federal income taxes.

To put that figure in perspective it is a rounding error compared to the Department of Defense budget. The Pentagon has now failed its financial audit eight years in a row. It is the only major federal agency that has never passed one. And it does not expect to pass until 2028. In its most recent audit it could not even verify the spare parts inventory for the F-35.  A program projected to cost over $2 trillion. Meanwhile this year's defense budget topped $1 trillion. And the administration has requested $1.5 trillion for next year a 44 percent increase. ICE's budget has roughly tripled. From about $10 billion a year to nearly $29 billion. After Congress handed it a $75 billion windfall. Making it the highest funded law enforcement agency in America. The IRS collected $5.3 trillion in total revenue in fiscal year 2025. The $70 to $95 billion at stake here represents a small fraction of that total.

It is also worth noting that many people in this income group already pay little or no federal income tax. Thanks to the standard deduction and refundable credits. For example the Earned Income Tax Credit and the Child Tax Credit. IRS data from 2023 shows that more than 49 million returns. Nearly one in three had zero federal income tax liability. 70 percent of them came from filers earning under $50,000.

Consider this in states across the country. The average teacher salary falls below $61,000. In Mississippi the average is $54,975. In Florida it is $56,663. In Louisiana $56,785.

For the millions of Americans in this income range who already pay little to nothing in federal income taxes. Who often receive every dollar withheld returned to them as a refund. What is the point of requiring them to file at all? What is the value of the time, money, stress  and administrative overhead. Spent processing returns that produce no net revenue? There is none. This proposal simply eliminates that waste.

Benefits

1. Simplifies the Tax System

Eliminating the filing requirement for this income group removes an annual burden from tens of millions of low and middle income Americans. It reduces the time, cost and confusion associated with calculating and submitting federal income tax forms each year. Allows the IRS to focus its resources where they generate actual revenue.

2. Saves Government Resources

The IRS spends significant money processing, auditing and enforcing returns that ultimately produce no net revenue. Removing these low yield returns from the system reduces administrative overhead. Frees enforcement resources for higher income filers and complex returns. Where audit activity produces a meaningful financial return.

3. Promotes Economic Fairness

People in this income range already contribute to the system through payroll taxes, state taxes, local taxes and sales taxes. This proposal acknowledges that contribution. Allows working class families to keep more of their take home pay. Money that will go directly toward housing, healthcare, childcare and other essential needs. Not into a tax filing process that benefits no one.

Fiscal Impact

The maximum annual revenue loss under this proposal would be approximately $70 to $95 billion. Based on the most recent IRS data. That gap could be closed through any combination of the following approaches:

  • Kincaid's defense procurement reform plan. Opening shipbuilding and defense procurement to trusted allies like South Korea and Japan. Saves at least $20 billion every single year. That one reform alone covers more than a quarter of the cost of this proposal. Read the full plan here.
  • Restoring individual income tax rates on earnings above $400,000 to pre 2017 levels
  • Phasing out loopholes and preferential treatment for capital gains at the highest income levels
  • Modest reductions in other inefficient federal programs

The revenue offset options are plentiful. The fiscal case for this proposal is sound.

Implementation Framework

Eligibility: The exemption applies to individuals with total wage or salary income of $61,000 or less.

Automatic Exemption: IRS software and W-2 reporting systems would automatically exclude eligible households from income tax liability. No action is required on the part of the taxpayer.

Optional Filing: Taxpayers below the threshold may still file voluntarily if they wish to claim refundable credits or deductions.

Important Notes

This legislation does not eliminate the option to file. It eliminates the requirement. All existing tax credits remain fully intact. This proposal is focused specifically on the federal income tax.

A note for gig workers: if you work as an independent contractor for platforms like Uber or DoorDash. You receive a 1099 rather than a W-2, and you remain responsible for paying the self employment tax, which covers Social Security and Medicare. If you choose to take no deductions, the IRS can calculate your obligation automatically. If you wish to deduct business expenses such as mileage you may still voluntarily file a return. That option remains available to everyone.

A Note on Pre-Filled Tax Returns

Several countries already use pre-filled tax returns. A system in which the government prepares your tax form using data it already has from employers, banks and other reporting sources. The taxpayer simply confirms or corrects it. This approach dramatically reduces the burden on individuals and increases overall compliance.

Estonia operates a fully digital tax system in which most taxpayers complete their filing in under five minutes. Sweden sends taxpayers a pre-filled form that roughly 75 percent of filers confirm. With no further action required by text, phone, or app. Denmark, Norway and Finland each operate similar systems with high accuracy rates driven by employer and financial institution data. New Zealand moved to automatic assessment for wage earners in 2019. Meaning most taxpayers no longer need to file at all. Spain and Chile have each implemented pre-filled return systems used by millions of taxpayers with strong results.

The United States government already possesses the W-2 and 1099 data necessary to pre-fill returns for most Americans. The primary reason this has not happened is lobbying. For two decades. Tax preparation companies including Intuit. The maker of TurboTax. With other companies like H&R Block. Have spent millions of dollars fighting legislation. That would allow the IRS to offer free pre-filled filing directly to taxpayers. This is not a technological problem. It is a political one.

Related Link: Inside TurboTax's 20-Year Fight to Stop Americans From Filing Their Taxes for Free -- ProPublica

Conclusion

This is not a giveaway. It is an efficiency upgrade. A long overdue modernization of a system that no longer reflects how millions of Americans actually live and work. If the government already knows what you earned and you do not owe anything. Why should you be required to jump through hoops every year to prove it?

Eliminating federal income taxes for people earning $61,000 or less. That is fiscally responsible, administratively efficient and economically just. The cost to the federal budget is modest. The benefit to tens of millions of households is real and immediate. This proposal deserves a vote in Congress. Those who vote against it should be prepared to explain to their constituents exactly why.

The math works. This is a fully feasible proposal. Anyone who claims otherwise is either uninformed or being deliberately misleading.

For Republicans who oppose revisiting the 2017 tax cuts, adjusting capital gains treatment or trimming defense spending. There are hundreds of other ways to recover the $70 to $95 billion. The money is not the obstacle. The real question is whether there are enough members of Congress who genuinely care about hardworking Americans.

Every day millions of people work full time or more than full time and still struggle to get ahead. They are not asking for a handout. They are asking for a system that does not pile unnecessary burdens on top of already difficult lives. Congress must stop talking and start acting. It has spent years discussing the housing crisis without taking meaningful action. It has debated the long term solvency of Social Security and Medicare for decades without delivering real solutions. That pattern must end.

Eliminating federal income tax for those earning $61,000 or less will not make anyone wealthy. But it will help millions of Americans breathe a little easier. It will make daily survival a little less exhausting. And that alone makes it worth doing.

Draft Legislation

Real Tax Reform and Simplification Act of 2027

120th Congress · 1st Session · H.R. XXXX

IN THE HOUSE OF REPRESENTATIVES

Kincaid introduced the following bill which was referred to the Committee on Ways and Means.

A BILL to eliminate federal income tax liability and filing requirements for individual taxpayers with annual earned income of $61,000 or less and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

Section 1. Short Title

This Act may be cited as the "Real Tax Reform and Simplification Act of 2027."

Section 2. Income Tax Exemption for Individuals Earning $61,000 or Less

(a) In General. Section 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

(j) Exemption for Low Income Earners.

(1) Notwithstanding any other provision of this section. In the case of an individual whose adjusted gross income from wage or salary income does not exceed $61,000 during the taxable year.

(A) no tax shall be imposed under this section and

(B) such individual shall not be required to file a return under section 6012 unless otherwise required to claim a refundable credit.

(2) This subsection shall apply regardless of filing status or number of dependents.

Section 3. Automatic Filing Exemption Mechanism

(a) Automatic Exemption via Reporting Entities. The Secretary of the Treasury shall establish regulations requiring that all W-2 and 1099 income reporting entities submit income data in a manner that enables the IRS to automatically identify and exclude qualifying individuals from filing requirements under section 6012 of the Internal Revenue Code of 1986.

(b) Voluntary Return Filing. Nothing in this Act shall prevent an eligible taxpayer from voluntarily filing a tax return for the purpose of claiming a refund or any refundable tax credit.

Section 4. Self-Employment Tax Treatment

(a) Individuals with income reported solely via Form 1099 who earn $61,000 or less in a taxable year shall remain subject to the self-employment tax under section 1401 of the Internal Revenue Code of 1986.

(b) Such individuals shall not be required to file a federal income tax return unless electing to deduct eligible business expenses or claim refundable credits.

Section 5. Fiscal Offset

To offset any reduction in federal revenue resulting from the provisions of this Act the following changes shall be enacted:

  • (1) The top marginal individual income tax rate shall revert to the rate in effect prior to the Tax Cuts and Jobs Act of 2017.
  • (2) The preferential tax rate for capital gains income on earnings over $1,000,000 shall be eliminated.

Section 6. Effective Date

This Act shall apply to taxable years beginning after December 31, 2027.

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Location: Seattle, WA, USA

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