History of United States Federal Income Tax

I almost have my taxes done for this year. The forms are complete in the online tax software, but I have been putting off hitting the magic submit button, due to the fact that I am going to owe good old Uncle Sam this year. ;-)

Since I have not filed, it is hard to get taxes out of my head at nightly. So tonight I thought it would be fun to research the history of the US Federal Income tax. Below are a few interesting points that I found from Wikipedia’s article on “Income tax in the United States”:

  • The U.S. income tax was first proposed during the War of 1812, but was defeated.
  • Income taxes were enacted at various times until 1894, but were not imposed after 1895 until the 16th Amendment was ratified in 1913.
  • In 1913 the tax rate was 1% on taxable net income above $3,000 ($4,000 for married couples), less deductions and exemptions. It rose to a rate of 7% on incomes above $500,000.
  • During World War I the top rate rose to 77%; after the war, the top rate was scaled down to a low of 25%.
  • During the Great Depression and World War II, the top income tax rate rose again. In the Internal Revenue Code of 1939, the top rate was 75%. The top rate reached 94% during the war and remained at 91% until 1964.
  • The Tax Reform Act of 1986 reduced the top rate to 28%, at the same time raising the bottom rate from 11% to 15% (in fact 15% and 28% became the only two tax brackets).
  • During the 1990s the top rate rose again, standing at 39.6% by the end of the decade.
  • The top rate was cut to 35% and the bottom rate was cut to 10% by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA).
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