U.S. Federal Tax Brackets History

The top marginal federal income tax rate from 1913 to 2026 — every major tax act, what it changed, and why.

Last updated: April 27, 2026 · Sources: IRS, Tax Foundation, Joint Committee on Taxation

Top marginal federal income tax rate, 1913-2026

Tap or hover an event marker at the top of the chart to read the legislation summary. Data points show the top marginal rate for each year shown.

94%

All-time peak

Set in 1944 by the Individual Income Tax Act. The rate stayed above 90% for most of 1944-1963.

28%

Modern low

Tax Reform Act of 1986 produced the lowest top rate of the modern era, in effect 1988-1990.

~60%

Historical average

The mean top marginal rate from 1913-2026 is roughly 60%. Today's 37% is well below the long-run average.

The major tax acts, in narrative order

Tax brackets are set by Congress, not the President. Below are the legislative milestones that drove the line on the chart above.

1913

Revenue Act of 1913 — the income tax begins

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 $15M in 2026 dollars. Fewer than 1% of households filed.

1942 / 1944

WWII transforms the tax — and who pays it

The Revenue Act of 1942 raised the top rate to 88% and was called by Treasury Secretary Henry Morgenthau 'the greatest tax bill in American history.' The 1944 Individual Income Tax Act peaked the top rate at 94% on income over $200,000 and — more durably — introduced payroll withholding. Before 1944, most Americans owed no income tax. After 1944, nearly all wage earners did. The 'mass tax' was born.

1964

Revenue Act of 1964 — Kennedy-Johnson cuts

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. Brackets shrank from 24 to 14. The legislation was the first in modern memory framed explicitly as a growth-oriented cut rather than a war-finance hike or a depression-era hike.

1981 / 1986

ERTA and TRA86 — the Reagan-era restructuring

The Economic Recovery Tax Act of 1981 (ERTA, also called Kemp-Roth) cut the top rate from 70% to 50% over five years and indexed brackets to inflation for the first time. Five years later, the Tax Reform Act of 1986 went further: it collapsed 14 brackets into two (15% and 28%), broadened the base by killing dozens of shelters, and — uniquely — equalized the long-term capital gains rate with the ordinary income rate. TRA86 remains the largest base-broadening, rate-flattening reform in U.S. history. By 1988, the top rate was 28% — its lowest level since 1931.

1990 / 1993

Deficit-driven hikes

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.

2001 / 2003

EGTRRA and JGTRRA — the Bush cuts

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.

2013

ATRA — the 'fiscal cliff' resolution

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.

2017

TCJA — largest reform since 1986

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.

How the bracket structure has changed

The top rate is only one dimension. The number of brackets and the income thresholds where they kick in have also moved dramatically — sometimes more than the headline rate.

Year	Brackets	Top rate	Top bracket starts (nominal $)	Top bracket starts (2026 $)
1913	7	7%	$500,000	~$15.7M
1944	24	94%	$200,000	~$3.5M
1981	16	70%	$215,400	~$725K
1988	2	28%	$29,750	~$80K
2000	5	39.6%	$288,350	~$535K
2017	7	39.6%	$418,400	~$540K
2026	7	37%	$626,350	$626,350

Bracket counts are for single filers. 2026 dollars use the BLS CPI-U deflator. The 1988 row shows TRA86's two-bracket structure, the most compressed in the modern era.

Things you might not know

Withholding is younger than the income tax. The income tax began in 1913, but employer withholding wasn't introduced until 1944. Before then, taxpayers paid in lump sums each March.
The U.S. once had 56 brackets. The Revenue Act of 1918 had 56 individual brackets ranging from 6% to 77%. The TRA86 collapse to 2 brackets was a 96% reduction in bracket count.
The 1986 reform equalized capital gains with ordinary income. For the only time in modern U.S. history, long-term capital gains were taxed at the same 28% rate as wage income. JGTRRA reversed that in 2003.
OBRA 1993 passed by one vote. Vice President Al Gore broke a 50-50 tie in the Senate to add the 36% and 39.6% brackets — the only post-1986 increase in the top rate until ATRA in 2013.
Bracket indexation is younger than ERTA. Before 1981, brackets were defined in nominal dollars and "bracket creep" silently raised effective tax rates as inflation pushed earners into higher brackets. ERTA indexed brackets to CPI starting in 1985.

Frequently Asked Questions

What was the highest federal income tax rate in U.S. history?

94% on income over $200,000 in 1944 and 1945, set by the Individual Income Tax Act of 1944 to fund the latter half of World War II. Before brackets were inflation-indexed, that $200,000 threshold would equal roughly $3.5 million in 2026 dollars — so very few people actually paid the full 94%.

When was the top federal tax rate at its lowest?

After the original Revenue Act of 1913, the top rate was 7%. In modern times, the lowest top rate was 28% — set by the Tax Reform Act of 1986 and in effect from 1988 through 1990. Today's 37% rate (set by TCJA in 2018) is the lowest since 1992.

Are top tax rates today historically high or low?

Historically low. Across the 1913-2026 period, the average top marginal rate is roughly 60%. Today's 37% is well below that average and below every year from 1932 through 1986. However, the modern brackets kick in at much lower real-dollar income thresholds than the WWII-era brackets did, so effective tax burdens have been more stable than the headline rates suggest.

Did people actually pay 94% in 1944?

Almost no one paid that headline rate on most of their income. The 94% bracket only applied to income above $200,000 — equivalent to roughly $3.5M in 2026 dollars — and earners at that level had access to deductions, exclusions, and shelters that have since been eliminated. The effective tax rate paid by the top 1% in 1944 was closer to 60%, still high by modern standards but far below 94%.

Why does the top rate change so rarely now?

Since the Tax Reform Act of 1986, every major change in the top rate has had to clear the Senate's 60-vote threshold or pass via budget reconciliation, which forces sunsets. ERTA, EGTRRA, JGTRRA, and TCJA all used reconciliation, which is why their individual provisions had built-in expiration dates. The only post-1986 hike — OBRA 1993 — passed by a one-vote Senate margin.

What's the difference between the top marginal rate and the effective tax rate?

The top marginal rate is the rate paid on the last dollar of income for the highest earners. The effective rate is total tax divided by total income — always lower than the top marginal rate because the lower brackets stack underneath. In 1960, the top marginal rate was 91%, but the effective rate paid by the top 1% was about 42%. The chart on this page shows the marginal rate, not effective rates.

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