📊 A Visual History of Income Tax in the United States
From Civil War Emergency to Modern Tax Code (1861-2025)
Tracking 164 Years of Federal Income Taxation
Top Marginal Income Tax Rate (1913-2025)
Complete Timeline: Major Milestones & Legislative Changes
First U.S. Income Tax - Revenue Act of 1861
To finance the Civil War, Congress passed the first federal income tax. Rate: 3% on incomes over $800 (about $28,000 today). Signed by President Abraham Lincoln. This was a temporary wartime measure.
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived...
Revenue Act of 1862 - First Progressive Tax
Replaced 1861 act with a progressive tax structure. Rates: 3% on incomes $600-$10,000, 5% on incomes over $10,000. Created the Bureau of Internal Revenue (precursor to IRS). Raised crucial funds for Union war effort.
Income Tax Repealed
With the Civil War over and government finances stabilized, the income tax was allowed to expire. The federal government returned to funding itself primarily through tariffs and excise taxes. This lasted 41 years.
Wilson-Gorman Tariff Act - Income Tax Returns
Congress enacted a 2% tax on incomes over $4,000. However, this was short-lived.
Pollock v. Farmers' Loan & Trust Co.
Supreme Court ruled the 1894 income tax unconstitutional (5-4 decision). Court held that direct taxes must be apportioned among states by population. This ruling necessitated a constitutional amendment.
The income tax law...is, in its nature, an unconstitutional, socialistic law.
16th Amendment Ratified - Permanent Income Tax
The 16th Amendment gave Congress explicit power to tax income without apportionment among states. Ratified by 42 of 48 states. Revenue Act of 1913 followed: 1% tax on incomes over $3,000, rising to 7% on incomes over $500,000. Only affected top 3% of households.
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
Revenue Act of 1916 - WWI Preparedness
As WWI raged in Europe, top rate increased to 15% on incomes over $2 million. Tax base expanded to fund military preparedness.
WWI Tax Increases - War Revenue Acts
U.S. entry into WWI required massive funding. Top rate jumped to 67% (1917), then 77% (1918). Tax base dramatically expanded. Revenue increased from $761 million (1916) to $3.6 billion (1918).
A billion dollars for national defense! There is something almost appalling about it.
Mellon Tax Cuts - Post-War Reductions
Treasury Secretary Andrew Mellon advocated for lower rates. Top rate reduced from 77% to 73% (1921), 58% (1922), 46% (1924). Mellon argued lower rates would increase revenue by stimulating economy.
The history of taxation shows that taxes which are inherently excessive are not paid. The high rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business.
Continued Mellon Cuts - Roaring Twenties
Top rate fell to 25% (1925), then 24% (1929). Lowest peacetime rate since 1916. Period of economic prosperity, though inequality grew significantly.
Revenue Act of 1932 - Great Depression Response
Facing massive deficits from the Depression, President Hoover signed largest peacetime tax increase. Top rate jumped from 24% to 63%. Also introduced new taxes on gifts, estates, and corporate income.
Nothing is more important than balancing the budget with the least increase in taxes.
Roosevelt's "Soak the Rich" Tax
President Franklin D. Roosevelt pushed Revenue Act of 1935, raising top rate to 79%. Called the "Wealth Tax Act." Targeted very high incomes to fund New Deal programs.
Wealth in the modern world does not come merely from individual effort; it results from a combination of individual effort and of the manifold uses to which the community puts that effort.
WWII Tax Increases - Highest Rates Ever
WWII required unprecedented revenue. Top rate reached 94% (1944-1945) on incomes over $200,000 ($3.3 million today). Tax base massively expanded—taxpayers grew from 7 million (1940) to 42 million (1945). Withholding introduced in 1943.
I shall ask the Congress for steeply graduated taxes...to keep the cost of the war out of the pockets of the common man.
Post-WWII Adjustments
Top rate reduced slightly to 91% (1946) and remained there through 1963. High rates maintained to service war debt and fund post-war programs. Korea War (1950-53) kept rates high.
Kennedy-Johnson Tax Cuts
Proposed by President Kennedy, enacted under President Johnson. Top rate cut from 91% to 70%. Bottom rate cut from 20% to 14%. Supply-side economics argument: lower rates stimulate growth.
It is a paradoxical truth that tax rates are too high today and tax revenues are too low, and the soundest way to raise revenues in the long run is to cut rates now.
Vietnam War Surtax
President Johnson signed 10% surtax to fund Vietnam War. Temporary measure lasted through 1970. Top effective rate reached 77% briefly.
Reagan's Economic Recovery Tax Act (ERTA)
Largest tax cut in history at the time. Top rate cut from 70% to 50% over 3 years. All brackets cut 23%. Part of "Reaganomics" - supply-side economic theory.
The most direct and significant kind of federal action aiding economic growth is to cut tax rates.
Tax Reform Act of 1986
Landmark bipartisan reform. Top rate cut to 28% (lowest since 1916). Brackets simplified from 15 to 2. Base broadened—many deductions eliminated. Revenue neutral.
There is no better feeling than to see the joy in someone's face when you tell them we're simplifying the tax code and lowering their tax rate.
Bush Sr. Tax Increase
Breaking "Read my lips: no new taxes" pledge, President George H.W. Bush signed Omnibus Budget Reconciliation Act. Top rate raised to 31% to address deficit.
Read my lips: no new taxes.
Clinton Tax Increase
Omnibus Budget Reconciliation Act of 1993. Top rate raised to 39.6%. New 36% bracket added. Passed without single Republican vote. Aimed at deficit reduction.
People who make over $200,000 a year should pay more. Not a lot more, but more.
Bush Tax Cuts (EGTRRA & JGTRRA)
Economic Growth and Tax Relief Reconciliation Act (2001) and Jobs and Growth Tax Relief Reconciliation Act (2003). Top rate cut to 35%. All brackets reduced. Capital gains and dividend tax cuts. Set to expire 2010.
The surplus is not the government's money. The surplus is the people's money.
Obama Extension of Bush Cuts
Tax Relief Act of 2010: Bush tax cuts extended 2 years for all income levels. Payroll tax cut added (2% reduction).
American Taxpayer Relief Act - Fiscal Cliff
Bush tax cuts made permanent for incomes below $450,000 (couples). Top rate raised to 39.6% for higher earners. Averted "fiscal cliff" automatic tax increases.
Thanks to the votes of Democrats and Republicans, I will sign a law that raises taxes on the wealthiest 2% of Americans while preventing a middle-class tax hike.
Tax Cuts and Jobs Act (TCJA)
Major tax overhaul. Top individual rate cut to 37%. Corporate rate slashed from 35% to 21%. Standard deduction doubled. SALT deduction capped at $10,000. Individual provisions expire 2025.
It will be the biggest tax cut in the history of our country.
Biden Administration - Current Era
Top rate remains 37%. No major rate changes enacted, though Biden proposed raising top rate to 39.6% and increasing capital gains taxes for high earners. TCJA individual provisions set to expire December 31, 2025.
I think you should be able to become a billionaire and a millionaire, but pay your fair share.
Current Federal Income Tax Brackets (2025)
Single Filers
| Rate | Income Range |
|---|---|
| 10% | $0 - $11,925 |
| 12% | $11,925 - $48,475 |
| 22% | $48,475 - $103,350 |
| 24% | $103,350 - $197,300 |
| 32% | $197,300 - $250,525 |
| 35% | $250,525 - $626,350 |
| 37% | Over $626,350 |
Married Filing Jointly
| Rate | Income Range |
|---|---|
| 10% | $0 - $23,850 |
| 12% | $23,850 - $96,950 |
| 22% | $96,950 - $206,700 |
| 24% | $206,700 - $394,600 |
| 32% | $394,600 - $501,050 |
| 35% | $501,050 - $751,600 |
| 37% | Over $751,600 |
Top Marginal Tax Rate by Presidential Era
| President | Years | Party | Top Rate Range | Major Changes |
|---|---|---|---|---|
| Woodrow Wilson | 1913-1921 | D | 7% → 77% | WWI tax increases |
| Warren Harding | 1921-1923 | R | 77% → 73% | Post-war reduction begins |
| Calvin Coolidge | 1923-1929 | R | 73% → 24% | Mellon tax cuts |
| Herbert Hoover | 1929-1933 | R | 24% → 63% | Depression revenue act |
| Franklin D. Roosevelt | 1933-1945 | D | 63% → 94% | New Deal, WWII increases |
| Harry Truman | 1945-1953 | D | 94% → 91% | Post-war adjustment |
| Dwight Eisenhower | 1953-1961 | R | 91% → 91% | No change |
| John F. Kennedy | 1961-1963 | D | 91% → 91% | Proposed cuts (enacted '64) |
| Lyndon Johnson | 1963-1969 | D | 91% → 70% | Kennedy cuts enacted |
| Richard Nixon | 1969-1974 | R | 70% → 70% | No rate changes |
| Gerald Ford | 1974-1977 | R | 70% → 70% | No rate changes |
| Jimmy Carter | 1977-1981 | D | 70% → 70% | No rate changes |
| Ronald Reagan | 1981-1989 | R | 70% → 28% | Major tax cuts (1981, 1986) |
| George H.W. Bush | 1989-1993 | R | 28% → 31% | 1990 budget deal |
| Bill Clinton | 1993-2001 | D | 31% → 39.6% | 1993 deficit reduction |
| George W. Bush | 2001-2009 | R | 39.6% → 35% | 2001, 2003 tax cuts |
| Barack Obama | 2009-2017 | D | 35% → 39.6% | 2013 fiscal cliff deal |
| Donald Trump | 2017-2021 | R | 39.6% → 37% | 2017 Tax Cuts and Jobs Act |
| Joe Biden | 2021-2025 | D | 37% → 37% | No changes enacted |
Federal Income Tax Revenue (1913-2024)
Key Historical Insights
⚖️ The 16th Amendment - Foundation of Modern Taxation
Ratified February 3, 1913, the 16th Amendment overturned the 1895 Pollock decision and gave Congress the explicit power to levy income taxes without apportionment among states by population. This created the constitutional foundation for the modern tax system.
💰 War and Taxes - The Historical Pattern
Major wars have consistently driven tax increases:
- Civil War (1861-1865): First income tax created at 3%
- World War I (1917-1918): Top rate jumped from 15% to 77%
- World War II (1941-1945): Top rate reached all-time high of 94%
- Korea (1950-1953): Maintained 91% wartime rates
- Vietnam (1965-1973): 10% surtax added (1968-1970)
After each war, rates eventually declined but never returned to pre-war levels, establishing a ratchet effect in taxation.
📊 The Great Compression (1940s-1970s)
From the 1940s through 1970s, top marginal rates remained above 70%, peaking at 94% during WWII. This era of high progressive taxation coincided with:
- Dramatic reduction in income inequality
- Growth of American middle class
- Highest economic growth rates in U.S. history (1950s-1960s)
- Major infrastructure investments (Interstate Highway System)
💡 The Reagan Revolution (1980s)
The 1981 and 1986 tax cuts fundamentally restructured the tax code:
- Top rate cut from 70% to 28% (lowest since 1916)
- Brackets simplified from 15 to 2
- Capital gains rates reduced
- Based on supply-side "trickle-down" economic theory
- Deficits increased significantly despite economic growth
This marked a philosophical shift toward lower taxation that continues to influence policy debates today.
🔄 The Modern Era (1990-Present)
Tax rates have fluctuated between 28% and 39.6%:
- 1990: Bush Sr. breaks "no new taxes" pledge, raises to 31%
- 1993: Clinton raises to 39.6% for deficit reduction
- 2001-2003: Bush Jr. cuts to 35%
- 2013: Obama raises to 39.6% for top earners
- 2017: Trump cuts to 37%
Political gridlock has made major tax reform increasingly difficult, with most changes requiring single-party control of government.
⏰ The 2025 Fiscal Cliff
Critical deadline approaching: Most individual provisions of the 2017 Tax Cuts and Jobs Act expire December 31, 2025. Without Congressional action:
- Top rate rises from 37% to 39.6%
- Standard deduction cut in half
- Many middle-class tax cuts expire
- Estate tax exemption reduced by half
- SALT deduction cap expires
This will be one of the most significant tax policy debates in recent history, affecting every taxpayer.
Number of Tax Brackets Over Time
Remarkable Statistics
Highest Tax Rate Ever
1944-194594% on income over $200,000 (approximately $3.3 million in 2025 dollars). Applied to only about 10,000 taxpayers nationwide. Despite the high rate, effective tax rates were much lower due to deductions and loopholes.
Lowest Tax Rate (Post-1913)
1925-192824-25% top rate during the "Roaring Twenties." Andrew Mellon's philosophy: "The history of taxation shows that taxes which are inherently excessive are not paid."
Longest Period of Stability
1951-196391% top rate for 13 consecutive years under Presidents Truman, Eisenhower, and Kennedy. Despite this high rate, the 1950s saw strong economic growth averaging 4.2% annually.
Most Dramatic Increase
1916-1918From 15% to 77% in just 2 years to finance World War I. The tax base also expanded dramatically, with millions of Americans paying income tax for the first time.
Most Dramatic Decrease
1921-1925From 77% to 25% in 4 years under the Mellon tax cuts. Represented the fastest peacetime reduction in American history.
Taxpayer Expansion
1940-1945From 7 million to 42 million taxpayers during WWII. The income tax transformed from a "class tax" affecting only the wealthy to a "mass tax" affecting most American workers. Withholding introduced in 1943 made this expansion practical.
Data Sources & Historical References
Primary Sources:
Internal Revenue Service (IRS) Historical Tables | U.S. Department of the Treasury | Tax Foundation Historical Data | Tax Policy Center | Congressional Research Service Reports | National Bureau of Economic Research (NBER)
Legislative Documents:
Revenue Act of 1861 | Revenue Act of 1862 | 16th Amendment (1913) | Revenue Acts 1913-2017 | Tax Cuts and Jobs Act of 2017 | American Taxpayer Relief Act of 2012
Supreme Court Cases:
Pollock v. Farmers' Loan & Trust Co., 158 U.S. 601 (1895) | Brushaber v. Union Pacific Railroad Co., 240 U.S. 1 (1916)
Historical Analysis:
W. Elliot Brownlee, "Federal Taxation in America: A Short History" | Joseph J. Thorndike, "Their Fair Share: Taxing the Rich in the Age of FDR" | Marjorie E. Kornhauser, "The Origins of Capital Gains Taxation" | Tax History Museum | American Historical Association tax policy archives
Presidential Quotes:
Public Papers of the Presidents (various volumes) | American Presidency Project (UC Santa Barbara) | Presidential libraries and archives
Economic Data:
Bureau of Economic Analysis | Federal Reserve Economic Data (FRED) | Office of Management and Budget Historical Tables | Congressional Budget Office
Note: Tax rates and brackets adjusted for inflation where noted. All historical data verified against multiple sources. Quotes attributed to original speakers based on archived speeches and documents.