What the public record shows about Trump's federal income taxes
Donald Trump paid $750 in federal income taxes in 2016 and again in 2017, according to tax documents obtained by The New York Times in 2020. In 2018 and 2019, he paid no federal income tax. These figures came from his actual tax returns filed with the IRS, not estimates or claims.
The reason his payments were so low despite high reported income involves deductions and losses. Trump reported substantial business losses in those years, which reduced his taxable income. Real estate depreciation — a deduction that allows property owners to deduct the theoretical decline in building value — played a major role in lowering what he owed.
In 2020 and 2021, additional tax documents showed Trump paid $0 in federal income tax in 2020 and claimed a refund of about $5.2 million in 2021. Again, business losses and depreciation deductions were the primary reason his taxable income fell below zero on paper.
Key Takeaways
- Trump paid $750 in federal income taxes in both 2016 and 2017, and $0 in 2018, 2019, and 2020, according to tax returns reported by major news outlets.
- Real estate depreciation deductions — a legal tax strategy that allows owners to deduct the theoretical decline in property value — significantly reduced his taxable income in these years.
- Business losses from his various companies, when combined with depreciation, resulted in negative taxable income in some years.
- These tax payments were legal under current tax code; the low amounts reflect how the tax system treats real estate investors and business owners with substantial deductions.
How depreciation deductions work in real estate
Depreciation is a deduction the IRS allows property owners to take each year, even though the building may actually be increasing in value. The owner deducts a percentage of the building's cost as if it were wearing out, which reduces taxable income. For commercial and residential real estate, this deduction can be substantial because buildings are expensive.
Trump owns or owned numerous large properties — office towers, hotels, golf courses, and residential buildings. Each property generates a depreciation deduction. When you own dozens of properties worth hundreds of millions of dollars, the annual depreciation deductions can exceed your actual income from those properties, creating a paper loss.
This is not unique to Trump. Any real estate investor with significant holdings can use depreciation to reduce taxable income. The strategy is entirely legal and built into the tax code intentionally, though it remains controversial because wealthy investors can use it to pay little or no income tax while their net worth grows.
Business losses and how they reduce tax bills
Trump's companies have reported losses in various years. When a business loses money, that loss can be deducted from other income. If total losses exceed total income, the result is negative taxable income — meaning no federal income tax is owed.
Some of Trump's losses came from his Atlantic City casinos, which closed or were sold at losses in the 1990s and 2000s. Other losses came from golf courses, hotels, and other ventures that operated at a loss or were sold below their original cost. These losses, carried forward over multiple years under IRS rules, reduced his taxable income in the years shown in the tax documents.
The IRS allows businesses to deduct losses, and allows those losses to offset income from other sources. This is standard tax law, not a special arrangement. However, the scale of Trump's losses and deductions meant his taxable income fell far below his reported gross income.
The difference between income reported and taxes paid
Trump reported hundreds of millions of dollars in gross income during the years in question. His businesses took in money from hotels, golf courses, real estate sales, and licensing deals. However, gross income is not the same as taxable income.
From gross income, he deducted business expenses, depreciation, losses, and other allowable deductions. After all deductions, his taxable income was far lower — in some years, negative. Federal income tax is calculated on taxable income, not gross income. This is why someone can report high income but pay little or no tax.
The gap between gross income and taxable income is normal in the tax system. A homeowner with a $500,000 salary might pay no income tax if they have large mortgage interest deductions, charitable contributions, and other deductions that reduce taxable income below zero. The principle is the same, though the scale is different.
State and local taxes versus federal income tax
The tax documents that became public focused on federal income tax. Trump may have paid state and local taxes in New York, Florida, and other states where he owns property or does business. State and local tax obligations are separate from federal income tax and are calculated differently.
New York State and New York City both have income taxes and property taxes. Florida has no state income tax but does have property taxes. The amount Trump paid in state and local taxes is not fully documented in the same way his federal returns became public, so the total tax picture across all levels of government is incomplete.
What changed in Trump's tax situation over time
Trump's tax payments varied significantly from year to year. In some years before 2016, he paid more in federal income tax. In 2015, for example, he paid $641,931 according to documents released during his 2016 campaign. The variation reflects changes in his business performance, the timing of sales or losses, and the depreciation deductions available in each year.
The Tax Cuts and Jobs Act of 2017 also affected how real estate investors calculate depreciation and how business losses can be used. Changes to these rules in 2017 and beyond may have affected his tax situation in subsequent years, though the full details of how these changes applied to his specific situation are not fully public.
Why this matters for understanding the tax system
Trump's tax situation illustrates how the tax code treats real estate investors and business owners differently than wage earners. Someone earning $750,000 in salary would owe substantial federal income tax. Someone with $750,000 in gross income from real estate, after depreciation and losses, might owe nothing.
This is not a loophole in the sense of being illegal or hidden. The deductions Trump used are available to any real estate investor who meets the requirements. However, the scale of his holdings and the magnitude of his deductions meant he could report high income while paying minimal federal income tax. This dynamic has been part of tax policy debates for decades.
Frequently Asked Questions
Did Trump break the law by paying so little in taxes?
No. The deductions and strategies he used are legal under current tax code. The IRS reviewed his returns and did not assess additional taxes for the years shown in the public documents. However, the IRS has conducted audits of Trump's returns, and some audits were ongoing as of the time these documents became public.
Can regular people use the same deductions Trump used?
Some of them, yes. Any real estate investor can deduct depreciation on rental properties or commercial buildings. Business owners can deduct losses. However, the scale matters — Trump's deductions were large because his properties were worth hundreds of millions of dollars. A person with a single rental home would have much smaller depreciation deductions.
How did these tax documents become public?
The New York Times obtained Trump's tax returns in 2020 and reported on them. Additional returns were obtained by other news organizations and congressional committees. Trump did not voluntarily release them; they were obtained through reporting and legal processes. Trump has stated he would release his returns if he were not under audit, though the IRS has not confirmed the status of all audits.
What is the difference between gross income and taxable income?
Gross income is all the money a business or person takes in. Taxable income is what remains after deductions. Deductions include business expenses, depreciation, losses, and other items allowed by tax law. Federal income tax is calculated on taxable income, not gross income. This is why someone can report high gross income but owe little or no tax.
Could Trump's tax situation change under different tax laws?
Yes. If tax laws changed to limit depreciation deductions, eliminate the ability to carry forward losses, or change how real estate is taxed, his tax bill would increase. Various tax reform proposals over the years have included changes to real estate taxation, though none have been enacted into law that would have applied retroactively to the years shown in these documents.