Federal Tax Rate History: Top Marginal Rate by Year

Ratification of the 16th Amendment in February 1913 cleared the constitutional barrier that had killed the federal income tax in Pollock v. Farmers' Loan & Trust (1895). The Revenue Act passed in October 1913 introduced a 1% normal tax on income over $3,000 and a graduated 1-6% surtax that brought the top rate to 7% on income above $500,000 - roughly $16.9M in 2026 dollars. Fewer than 1% of households filed.

The Revenue Act of 1942 raised the top rate to 88% and sharply broadened the income-tax base. The Current Tax Payment Act of 1943 then put wages and salaries on a pay-as-you-go withholding system beginning July 1, 1943. The Individual Income Tax Act of 1944 pushed the top rate to 94% on income over $200,000. The rate peak and the withholding system came from separate laws, even though they are often compressed into the same wartime-tax story.

Proposed by Kennedy and signed by Johnson, the 1964 act cut the top rate from 91% to 77% in one year, and to 70% by 1965. The later Vietnam-era surcharge raised the IRS table's rate to 75.25% in 1968, 77% in 1969, and 71.75% in 1970.

The Economic Recovery Tax Act of 1981 (ERTA, also called Kemp-Roth) lowered the top rate to 50% in 1982 and provided for bracket indexation beginning in 1985. The IRS table reports 69.125% for 1981 after that year's rate reduction. The Tax Reform Act of 1986 phased the highest-bracket rate down to 38.5% in 1987 and 28% in 1988. The 1988-1990 schedules also included a temporary 33% band that phased out the benefit of the 15% bracket; a chart showing only 28% does not display that full schedule.

OBRA 1990 added a 31% bracket (and broke George H.W. Bush's 'read my lips' pledge). OBRA 1993 added 36% and 39.6% brackets and uncapped the Medicare wage base. By 2000, the top federal rate was 39.6% - and the federal budget was in surplus.

EGTRRA (2001) phased the top rate down from 39.6% to 35%, created the 10% bracket, and doubled the child tax credit. JGTRRA (2003) accelerated those cuts and dropped the long-term capital gains and qualified dividend rates to 15%. Both bills were enacted via budget reconciliation, which is why their provisions sunset - and why every Bush-era rate fight since has been about which provisions to extend.

The American Taxpayer Relief Act of 2012 (passed Jan 2, 2013) made most Bush cuts permanent but restored the 39.6% top bracket on the highest earners. Separately, the ACA's 3.8% Net Investment Income Tax took effect, and the 0.9% Additional Medicare Tax began on wage income over $200,000 / $250,000.

The Tax Cuts and Jobs Act lowered the top rate from 39.6% to 37%, doubled the standard deduction, capped the State and Local Tax (SALT) deduction at $10,000, killed personal exemptions, expanded the Child Tax Credit, and created the §199A pass-through deduction. Critically, the corporate cut was made permanent while individual provisions were scheduled to sunset at end of 2025. Most individual provisions were extended for 2026.