The FairTax Act of 2025 would repeal federal income, payroll, self-employment, estate, and gift taxes starting January 1, 2027. It would replace them with a national tax on the use or consumption of most new goods and services in the United States. The rate would be 23% of gross payments in 2027; later rates would combine rates for general revenue, Social Security, and Medicare. States that agree to administer the tax would collect it, while the Treasury Department would handle collection in other places. The bill would also phase out administration of the repealed taxes and create monthly sales-tax rebates for eligible families. It is under consideration by the House Ways and Means Committee.
If enacted, shoppers would generally pay the new tax on taxable goods and services. The bill provides a monthly rebate based on family size and federal poverty guidelines. To receive it, a family must register; members counted toward the rebate must have Social Security numbers and be lawful U.S. residents. The bill also directs that Social Security benefits be adjusted to account for the new tax in the cost-of-living calculation. The Sixteenth Amendment would have to be repealed within seven years of enactment or the bill’s provisions would stop applying to later years, as described in the bill.
The proposed tax rate is 23% of gross payments in 2027. The bill does not provide an estimate of how much households would pay overall or how the tax changes would affect federal revenue. It provides for monthly rebates for qualified families and allows sellers a credit for some costs of administering the tax.
The bill’s findings say replacing income and payroll taxes would promote savings, investment, economic growth, productivity, fairness, and privacy, and reduce taxpayer administrative burdens. These are claims stated in the bill, not measured outcomes.
No publicly available information.