Visual History of Income Tax in United States

01Top Marginal Income Tax Rate (1913-2026)

Top Marginal Income Tax Rate: 1913-2026

02Complete Timeline: Major Milestones & Legislative Changes

1861	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.
1862	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.
1872	Income Tax Repealed With the Civil War over and government finances stabilized, the income tax was allowed to expire.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.
1894	Wilson-Gorman Tariff Act - Income Tax Returns Congress enacted a 2% tax on incomes over $4,000. However, this was short-lived.
1895	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 present assault upon capital is but the beginning. It will be but the stepping-stone to others, larger and more sweeping, till our political contests will become a war of the poor against the rich.- Justice Stephen J. Field, concurring, Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429 (1895)
1913	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.- 16th Amendment to the U.S. Constitution
1916	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.
1917- 1918	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.- President Woodrow Wilson, 1916
1921- 1924	Mellon Tax Cuts - Post-War Reductions Treasury Secretary Andrew Mellon advocated for lower rates. Top rate reduced from 73% (1921) to 58% (1922), 43.5% (1923) and 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.- Andrew Mellon, Treasury Secretary (1921-1932)
1925- 1928	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.
1932	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.- President Herbert Hoover, 1932
1935- 1936	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.- President Franklin D. Roosevelt, 1935
1941- 1945	WWII Tax Increases - Highest Rates Ever WWII required unprecedented revenue. Top rate reached 94% (1944-1945) on incomes over $200,000 (about $3.6 million in 2025 dollars). 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.- President Franklin D. Roosevelt, 1942
1946- 1950	Post-WWII Adjustments The top bracket rate was cut to 91% in 1946 (86.45% after a 5% across-the-board reduction), fell to 82.13% in 1948-1949 and 84.36% in 1950, then returned to 91-92% from 1951 through 1963. High rates maintained to service war debt and fund post-war programs. Korea War (1950-53) kept rates high.
1964	Kennedy-Johnson Tax Cuts Proposed by President Kennedy, enacted under President Johnson. Top rate cut from 91% to 77% for tax year 1964 and 70% from 1965. Bottom rate cut from 20% to 16% (1964), then 14% (1965). 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.- President John F. Kennedy, 1962
1968- 1969	Vietnam War Surtax President Johnson signed 10% surtax to fund Vietnam War. Temporary measure lasted through 1970. Top effective rate reached 77% briefly.
1981	Reagan's Economic Recovery Tax Act (ERTA) Largest tax cut in history at the time. Top rate cut from 70% to 50% starting with tax year 1982 (69.125% for 1981 after a rebate). The other bracket rates were cut about 23% in steps over 3 years. Part of "Reaganomics" - supply-side economic theory. In this present crisis, government is not the solution to our problem; government is the problem.- President Ronald Reagan, First Inaugural Address, January 20, 1981
1986	Tax Reform Act of 1986 Landmark bipartisan reform. Top rate cut to 28% from tax year 1988, after a transitional 38.5% for 1987 (lowest top rate since 1931, when it was 25%). Brackets simplified from 15 to 2. Base broadened - many deductions eliminated. Revenue neutral. ...a fairer, simpler, profamily tax system for all.- President Ronald Reagan, statement on Senate action on the tax reform bill, June 24, 1986
1990- 1991	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.- President George H.W. Bush, 1988 Campaign (Promise broken 1990)
1993	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.- President Bill Clinton, 1993
2001- 2003	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.- President George W. Bush, 2001
2010- 2012	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).
2013	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.- President Barack Obama, 2013
2017	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 were set to expire after 2025 until the 2025 law below made the rates permanent. It will be the biggest tax cut in the history of our country.- President Donald Trump, 2017
2021- 2025	Biden Administration 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 were then set to expire December 31, 2025. I think you should be able to become a billionaire and a millionaire, but pay your fair share.- President Joe Biden, 2024
2025	One Big Beautiful Bill Act - Current Era Signed by President Trump on July 4, 2025 (P.L. 119-21). Makes the TCJA rates permanent, so the top rate stays at 37%. Standard deduction made permanent at the higher TCJA level ($15,750 single / $31,500 joint for 2025). SALT cap raised to $40,000 through 2029. New temporary deductions for 2025-2028: up to $25,000 of tip income, up to $12,500 of overtime pay ($25,000 joint) and $6,000 for taxpayers 65 and older.

03Current Federal Income Tax Brackets (2026)

Tax year 2026 brackets and standard deduction ($16,100 single, $32,200 married filing jointly, $24,150 head of household) per IRS Revenue Procedure 2025-32, released October 9, 2025. The IRS had not yet published 2027 figures as of mid-October 2026.

04Top Marginal Tax Rate by Presidential Era

05Federal Income Tax Revenue (1913-2024)

Federal Income Tax Revenue: 1913-2024 (Nominal Dollars)

Individual income tax receipts by fiscal year, billions of dollars (OMB Historical Tables; FY 2024 from the Treasury Monthly Treasury Statement).

06Key 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)

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 50% (1982), then to 28% (1988) - the lowest since 1931
• 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

Cliff avoided: Most individual provisions of the 2017 Tax Cuts and Jobs Act were due to 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

07Number of Tax Brackets Over Time

Tax Code Complexity: Number of Brackets Over Time

08Remarkable Statistics

1944- 1945	Highest Tax Rate Ever 94% on income over $200,000 (about $3.6 million in 2025 dollars, using the CPI-U from 1944). Applied to only about 10,000 taxpayers nationwide. Despite the high rate, effective tax rates were much lower due to deductions and loopholes.
1925- 1928	Lowest Tax Rate (Post-1913) 24-25% top rate during the "Roaring Twenties." Andrew Mellon's philosophy: "The history of taxation shows that taxes which are inherently excessive are not paid."
1951- 1963	Longest Period of Stability A top rate of 91% or more for 13 consecutive years (92% in 1952-1953) under Presidents Truman, Eisenhower, and Kennedy. Despite this high rate, the 1950s saw strong economic growth averaging 4.2% annually.
1916- 1918	Most Dramatic Increase From 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.
1921- 1925	Most Dramatic Decrease From 73% to 25% in 4 years under the Mellon tax cuts. Represented the fastest peacetime reduction in American history.
1940- 1945	Taxpayer Expansion From 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.

09Data 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. Historical top rates follow the Tax Policy Center table of highest marginal rates. Last updated: October 24, 2026. Quotes attributed to original speakers based on archived speeches and documents.