US Income Tax Turns 100

CPA Practice Advisor released a great article earlier this month: U.S. income tax turns 100. On February 3rd, the 16th Amendment and the birth of the US Federal Income Tax celebrated its 100th birthday, so let’s take a look at a few interesting facts from the article that you might not have known about income tax in the US.

Tax Rates

  • Before 1913 (when the US Congress passed the first permanent income tax), federal taxes were only enacted during wars and other national needs when necessary.
  • Taxes date back to ancient Egypt. Grain, livestock, and oils were actually used for money to pay the government.
  • During the Civil War in 1861, Congress passed the Revenue Act of 1861, which included a 3% tax on personal incomes over $800. This was to help pay for war expenses of course.
  • After a failed attempt to enact a similar tax in 1872, the 16th Amendment was ratified by Congress on February 3, 1913. This stated that “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.”
  • The first Form 1040 was documented in 1913.
  • In 1918, March 15 was set as the official filing deadline.
  • Income tax rose to 77% during WWI. This again was to help finance the war.
  • In 1955, the official filing date changed to April 15.
  • The Alternative Minimum (AMT) was enacted in 1969.
  • The IRS now collects more than $1.2 billion in taxes.