Presidential Tax Resolutions Timeline

Q. How much of your hard earned money went to Income Taxes? A. In 1952 – 90%!!!

Tax Resolution image

President Lincoln started the income tax to help pay for the Civil War. For a brief time, no tax was collected and then it became a standard annual tax.

Scroll down to compare income tax rates with the sitting U.S. President at the time and see what the income tax rate was during that year.

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1862

Income Tax Rate: 3% to 5%: 1862(Income Tax on $100,000 salary: $5,000)

Lincoln (R) pays for Civil War: 1862

Created commissioner of Internal Revenue & enacted income tax to pay for Civil War expenses.

1872

Income Tax Rate: 2.5%: 18722.5% on income over $2,000/year.
(Income Tax on $100,000 salary: $2,500)

Grant (R) repealed Income Tax: 1872

Income tax repealed

1894

Income Tax Rate: 2%: 18942% on income over $4,000/year.
(Income Tax on $100,000 salary: $2,000)

Cleveland (D): 1894

Income tax revived and Bureau of Internal Revenue Service created

1895

Income Tax Rate: 0%: 1895Thanks to the Supreme Court, there was no more income tax.
(Income Tax on $100,000 salary: $0)

Cleveland (D)- Income Tax Unconstitutional: 1895

Supreme Court ruled income tax unconstitutional

1909

Income Tax Rate: 0%: 1909No personal income taxes but Congress levied a 1% tax on net corporate income beginning at $5,000.

Taft (R) - Urges Congress to Amend Consitution for tax power: 1909

Taft proposed Congress create a constitutional amendment giving the government the power to tax incomes.

1913

Income Tax Rate: 1% to 7%: 1913-> 16th Amendment
-> 1% on net personal income and up to 6% surtax on incomes of $500,000+
-> repealed 1909 Corporate income tax
-> created first form 1040
(Income Tax on $100,000 salary: $1,000)

Wilson (D)- Congress passed 16th Amendment: 1913

Congress passed 16th Amendment allowing for income tax.
(Income Tax on $100,000 salary: $0)

1918

Income Tax Rate: 6% to 77%: 1918-> Revenue Act of 1918
-> codified existing tax laws
-> progressive income-tax rate up to 77%
(Income Tax on $100,000 salary: $64,000)

Wilson (D) needs to pay for WWI: 1918

Revenue Act of 1918 raised even greater sums for the WWI effort.

1931

Income Tax Rate: 1.5% to 25%: 1931(Income Tax on $100,000 salary: $25,000)

Hoover (R) - Capone convicted of tax evasion: 1931

IRS Intelligence Unit investigated Chicago Ganster Al Capone. Capone convicted of tax evasion and sentence to 11 years.

1942

Income Tax Rate: 19% to 88%: 1942-> Revenue Act of 1942
-> taxes increased and number of Americans subject to tax increased.
-> created deductions for medical and investment expenses.
-> (Income Tax on $100,000 salary: $85,000).

FD Roosevelt (D): 1942

The Revenue Act of 1942 was hailed by President Roosevelt as "the greatest tax bill in American history".

1943

Income Tax Rate: 19% to 88%: 194319% tax on income starting at $1/year and 88% tax on $200,000/year and more.
(Income Tax on $100,000 salary: $85,000)

FD Roosevelt (D) - Employers to withhold taxes.: 1943

Current Tax Payment Act: required employers to withhold taxes from employees' wages and pay them quarterly.

1944

Income Tax Rate: 23% to 94%: 194423% tax on income starting at $1/year and 94% tax on $200,000/year and more.
(Income Tax on $100,000 salary: $92,000)

FD Roosevelt (D) - Standard Deductions created: 1944

Individual Income Tax Act - created the standard deductions of From 1040

1952

Income Tax Rate: 22.2% to 92%: 195223% tax on income starting at $1/year and 94% tax on $200,000/year and more.
(Income Tax on $100,000 salary: $90,000)

Truman (D) - Head of Household vs. Married: 1952

-> Reorganization Plan No. 1
-> replace patronage system at the IRS with a career civil service system
-> Different tax for Head of Household vs. Married

1953

Eisenhower (R)- Insignificant Tax Rate Reduction: 1953

Eisenhower endorsed Truman's reorganization - changed the name from Bureau of Internal Revenue to the Internal Revenue Service

Income Tax Rate: 22.2% to 92%: 1953(Income Tax on $100,000 salary: $90,000)

1954

Income Tax Rate: 20% to 91%: 195420% tax on income starting at $1/year and 91% tax on $200,000/year and more.
(Income Tax on $100,000 salary: $89,000)

Eisenhower (R)- Insignificant Tax Rate Reduction: 1954

Deadline for individual tax returns changed - due April 15 instead of March 15.

1955

Income Tax Rate: 20% to 91%: 1955(Income Tax on $100,000 salary: $89,000)

Eisenhower (R) - married filing joinly status added to lower net tax rates: 1955

Married can file jointly - effect is slightly lower tax rates for joint returns

1961

Income Tax Rate: 20% to 91%: 1961(Income Tax on $100,000 salary: $89,000)

Kennedy (D) - Insignificant Tax Rate change: 1961

Computer Age began at IRS - Dedication of the National Computer Center at Martinsburg, W. Va.

1965

Income Tax Rate: 14% to 70%: 196514% tax on income starting at $1/year and 70% tax on $100,000/year and more.
(Income Tax on $100,000 salary: $70,000)

LB Johnson (D): 1965

IRS Instituted first toll-free telephone site

1971

Income Tax Rate: 14% to 70%: 1971(Income Tax on $100,000 salary: $70,000)

Nixon (R) - single filing status created: 1971

Single filing status created - same tax rate as filing Married separately.

1974

Ford( R) - IRS received responsibility for employee benefit plans.: 1974

Employee Retirement and Income Security Act (enacted 9/2/74) - Gave regulatory responsibilities for employee benefit plans to the IRS

Income Tax Rate: 14% to 70%: 1974(Income Tax on $100,000 salary: $70,000)

1986

Income Tax Rate: 11% to 50%: 198611% tax on income starting at $1,835/year and 50% tax on $87,625/year and more.
(Income Tax on $100,000 salary: $50,000)

Reagan (R) - Codified Tax Laws - reduced taxes: 1986

-> Tax Reform Act
-> limited electronic filing began
-> 300 provisions, 3 years to implement
-> codified tax laws for 3rd time since 1918.

1992

Income Tax Rate: 15% to 31%: 199215% tax on income starting at $1/year and 31% tax on $43,250/year and more.
(Income Tax on $100,000 salary: $31,000)

GHW Bush (R)- electronic filing: 1992

All taxpayers allowed to file returns electronically

1998

Income Tax Rate: 15% to 39.6%: 1998(Income Tax on $100,000 salary: $39,600)

Clinton (D) - expands taxpayer rights: 1998

IRS Restructuring and Reform Act - expanded taxpayer rights.

2000

Income Tax Rate: 15% to 39.6%: 2000(Income Tax on $100,000 salary: $35,000)

Clinton (D) - IRS Reforms: 2000

-> IRS reforms
-> ended geographic-based structure
-> created 4 division: Wage & Investment, Small business/self-employed, large and mid-size business and tax exempt & Government entities.

2001

Income Tax Rate: 15% to 39.1%: 2001(Income Tax on $100,000 salary: $35,500)

GW Bush (R) - Mid-Year Tax Refund: 2001

-> IRS administer a mid-year tax refund program
-> provide advance payments of a tax rate reduction.

2013

Income Tax Rate: 10% to 39.6%: 2013(Income Tax on $100,000 salary: $28,000)

Obama (D) - Affordable Care Act: 2013

-> American Taxpayer Relief Act of 2012 enacted
-> Net Investment tax of 3.8%

2014

Obama (D) - Affordable Care Act: 2014
-> Affordable Care Act roll out in 2014
-> 1% penalty for not having health insurance or up to $285 per family.
-> Same-sex married couples can file jointly.

Sources:
IRS website on Historical Highlights
Tax Foundation income tax rates history