Historical Income Tax Rates (2024)

FAQs

What was the highest income tax rate in US history? ›

The top individual marginal income tax rate tended to increase over time through the early 1960s, with some additional bumps during war years. The top income tax rate reached above 90% from 1944 through 1963, peaking in 1944, when top taxpayers paid an income tax rate of 94% on their taxable income.

For tax years 1944 through 1951, the highest marginal tax rate for individuals was 91%, increasing to 92% for 1952 and 1953, and reverting to 91% 1954 through 1963. For the 1964 tax year, the top marginal tax rate for individuals was lowered to 77%, and then to 70% for tax years 1965 through 1981.

The tax was limited to a 60% effective rate in 1971, and 50% in 1972-1976. In 1974, a statutory rebate effectively reduced this rate. The tax was limited to an 50% effective rate.

A history of the top marginal tax rates on the wealthiest Americans: 1940: 81% 1950: 84% 1960: 91% 1970: 72% 1980: 70% 1990: 28% 2000: 40% 2010: 35% For 50 years, corporate backed politicians in Congress have slashed taxes to line the pockets of their wealthy donors.

As per FY 2021 reports, Jeff Bezos was the highest individual taxpayer in the world by, paying over USD 2.4 billion in taxes.

The top individual rate reached a high of 94 percent in 1944-45, and the top corporate rate reached a high of 53 percent in 1968-69. [4] However, the top rate has not always applied to every type of income.

Thanks to a tax code that favors income from wealth over income from work—and a slew of tax-avoidance strategies—the richest among us end up paying a smaller percentage of their income to the federal government than most working families.

1862 - President Lincoln signed into law a revenue-raising measure to help pay for Civil War expenses. The measure created a Commissioner of Internal Revenue and the nation's first income tax. It levied a 3 percent tax on incomes between $600 and $10,000 and a 5 percent tax on incomes of more than $10,000.

1-1.5% Colonial and Early Americans paid a very low tax rate, both by modern and contemporary standards. Just prior to the Revolution, British tax rates stood at between 5-7%, dwarfing Americans' 1-1.5% tax rates.

How did the US government make money before income taxes? ›

Before an income tax was established, the majority of funds given to the federal government derived from tariffs on domestic and international goods.

Wealthy family buys stocks, bonds, real estate, art, or other high-value assets. It strategically holds on to these assets and allows them to grow in value. The family won't owe income tax on the growth in the assets' value unless it sells them and makes a profit.

Previous studies of the U.S. Great Depression find that increased government spending and taxation contributed little to either the dramatic downturn or the slow recovery. These studies include only one type of capital taxation: a business profits tax.

The Civil War led to the creation of the first income tax in the U.S. The federal income tax still in place in 2024 was officially enacted in 1913. Many of the taxes we pay were created in the 1920s and 1930s, including the estate tax, gift tax, and Social Security taxes.

The U.S. currently has seven federal income tax brackets, with rates of 10%, 12%, 22%, 24%, 32%, 35% and 37%. If you're one of the lucky few to earn enough to fall into the 37% bracket, that doesn't mean that the entirety of your taxable income will be subject to a 37% tax. Instead, 37% is your top marginal tax rate.

With the continuation of the Depression and beginning of World War II, it jumped into the 70s, 80s, and 90s percentile ranges, peaking in 1945 at 94 percent for incomes of $200,000 or more (an historically low threshold, although still about $2 million in 2002 dollars).

To help finance the war, U.S. income taxes were raised to the highest levels in history. For 1944 and 1945, income amounts above $200,000 — about $3.3 million in today's dollars — were taxed at an astounding marginal tax rate of 94%! After the war, that top rate was brought down to 91%.