H.R.25 FairTax Act of 2025

Representative Buddy Carter (R-GA-1) introduced and sponsored the FairTax Act of 2025 (H.R.25) with 3 cosponsors on January 10, 2025. This legislation seeks to fundamentally change the federal tax system by abolishing the federal income tax, payroll taxes, and estate and gift taxes, replacing them with a single national sales tax. Proponents argue that this approach would simplify tax filings and ensure a more transparent system, while critics raise concerns about potential regressivity and the impact on lower-income Americans.

If passed, the bill would effectively eliminate most functions of the Internal Revenue Service (IRS), shifting significant responsibilities to state-level sales tax agencies. Supporters contend that the introduction of a “prebate” (a monthly rebate) would help offset the sales tax burden for lower-income households. However, opponents note that the transition could pose administrative challenges and may lead to uneven outcomes for different communities.

Shortly after being introduced, the legislation was referred to the House Committee on Ways and Means. Though it has garnered attention as a bold restructuring of the nation’s tax policy, its chances of passage remain uncertain. The FairTax Act of 2025 has drawn support from various conservative groups that favor smaller government and a simpler tax code, but it has also met strong pushback from economists and advocacy groups who worry about its broader socioeconomic implications.