The 16th Amendment to the U.S. Constitution gives Congress the power to tax income from any source without having to divide that tax among the states based on population. Ratified on February 3, 1913, its full text is a single sentence: “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.”1National Archives. 16th Amendment to the U.S. Constitution: Federal Income Tax (1913) Every dollar of federal income tax collected since then traces its authority to those 30 words.
Why the Amendment Was Necessary
The original Constitution required that “direct taxes” be apportioned among the states according to population. Article I, Section 9 barred any direct tax that didn’t match census numbers.2Congress.gov. ArtI.S9.C4.1 Overview of Direct Taxes In practice, that meant Congress couldn’t just declare a uniform percentage tax on everyone earning over a certain amount. It first had to calculate each state’s share by population, then find a way to collect that share from residents within the state.
Congress tried a peacetime income tax in the Wilson-Gorman Tariff Act of 1894, imposing 2% on personal incomes above $4,000. The Supreme Court struck it down the following year in Pollock v. Farmers’ Loan & Trust Co., holding that a tax on income from property was a direct tax that had to be apportioned.3Justia U.S. Supreme Court Center. Pollock v. Farmers’ Loan and Trust Co., 157 U.S. 429 (1895) Apportionment made a workable national income tax essentially impossible, because a populous but poorer state would carry a disproportionate share.
Pollock blocked federal income taxation for nearly two decades. Congress eventually proposed the 16th Amendment on July 2, 1909, and the states ratified it on February 3, 1913.1National Archives. 16th Amendment to the U.S. Constitution: Federal Income Tax (1913)
What “Without Apportionment” Changed
The amendment removes the apportionment requirement for income taxes. A person earning $100,000 in Wyoming now owes the same federal income tax as someone earning $100,000 in California, regardless of either state’s population. The tax follows the individual, not the state.
The Supreme Court confirmed the amendment’s function in Brushaber v. Union Pacific Railroad Co. (1916), upholding the new income tax and explaining that its purpose was “to relieve all income taxes when imposed from apportionment from consideration of the source whence the income is derived.”4Justia U.S. Supreme Court Center. Brushaber v. Union Pacific R. Co., 240 U.S. 1 (1916) The amendment didn’t invent a new taxing power. Congress had always had authority to tax. What the amendment did was clear away the apportionment rule that had made exercising that power unconstitutional after Pollock.
“From Whatever Source Derived”
Before 1913, courts distinguished between income earned through labor and income earned through property, and Pollock had treated taxes on rental income and investment returns as direct taxes on the property itself. The phrase “from whatever source derived” erased that distinction. Congress doesn’t have to classify where money came from before taxing it.
Congress put that broad authority into practice through Section 61 of the Internal Revenue Code, which defines gross income as all income from whatever source derived and gives a non-exhaustive list: wages, salaries, interest, dividends, rents, royalties, and gains from selling property, among others.5Office of the Law Revision Counsel. 26 U.S. Code 61 – Gross Income Defined The statute uses “including (but not limited to),” so new categories of earnings don’t need new legislation to become taxable.
The working definition of income comes from Commissioner v. Glenshaw Glass Co. (1955), which described taxable income as “undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion.”6Library of Congress. Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955) That test captures things people might not think of as income, including lottery winnings, gambling profits, prizes, and canceled debts.
The word “realized” matters. A gain isn’t taxed until something triggers recognition. If your home doubles in value while you live in it, that paper gain isn’t income. Sell the home, and the profit becomes realized income subject to tax.
What Congress Has Chosen Not to Tax
The amendment’s reach is broad, but Congress has written specific exclusions into the tax code. Gifts, bequests, and inheritances are excluded from the recipient’s gross income, though any future income the inherited property generates (rent, interest, dividends) is taxable.7Office of the Law Revision Counsel. 26 USC 102 – Gifts and Inheritances Life insurance proceeds paid to a beneficiary at the insured’s death are generally excluded, with an exception for the interest portion of installment payments.8Office of the Law Revision Counsel. 26 USC 101 – Certain Death Benefits Interest on state and local government bonds is excluded from federal gross income, though capital gains from selling those bonds are not.9Office of the Law Revision Counsel. 26 USC 103 – Interest on State and Local Bonds
These exist because Congress created them, not because the 16th Amendment lacks the reach to cover them. Congress could constitutionally repeal any of them.
The Open Question of Unrealized Gains
Whether Congress can tax wealth increases that haven’t been sold or converted to cash is still unresolved. The Supreme Court had an opening to settle it in Moore v. United States (2024), a challenge to a one-time tax on accumulated overseas corporate profits. The Court upheld the tax but declined to reach the larger question, writing that it did “not address the Government’s argument that a gain need not be realized to constitute income under the Constitution.”10U.S. Supreme Court. Moore v. United States, No. 22-800 (2024)
Proposals to tax unrealized capital gains on very high-net-worth individuals have circulated in Congress, and any such law would almost certainly draw a 16th Amendment challenge. For now, the constitutional line between taxable “income” and untaxed unrealized appreciation remains unsettled.
Arguments That the Income Tax Doesn’t Apply
The 16th Amendment has drawn more than a century of challenges from people claiming the federal income tax is illegitimate. Common arguments include that the amendment was never properly ratified, that wages aren’t “income,” that paying taxes is voluntary, and that only federal employees owe income tax. Courts have rejected all of these, and the IRS maintains an official list of positions it treats as legally frivolous.
Filing a return based on one of those positions carries a $5,000 penalty per frivolous return or submission, whether or not any tax is owed.11Office of the Law Revision Counsel. 26 USC 6702 – Frivolous Tax Submissions The IRS gives a 30-day window to withdraw a submission after notice. Taking the same arguments into Tax Court can bring additional sanctions.
Deliberately evading federal income tax is a felony. Conviction under the tax evasion statute carries a fine of up to $100,000 for individuals ($500,000 for corporations), up to five years in prison, or both, plus prosecution costs.12Office of the Law Revision Counsel. 26 USC 7201 – Attempt to Evade or Defeat Tax The government has to prove willful intent, meaning you knew you owed the tax and tried to avoid it. An honest mistake isn’t evasion; hiding income or filing false documents is.
How the Amendment Shapes Your Taxes Now
The one-sentence grant of power supports the tax system that produces the majority of federal revenue. For tax year 2026, the federal income tax uses seven brackets with rates from 10% to 37%. The standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household, and these figures adjust annually for inflation.13Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
The tax applies to both individuals and corporations. Self-employed people with net earnings of $400 or more must file a return even if their total income sits below the standard filing thresholds. The bracket structure is progressive, but only the income within each bracket faces that bracket’s rate. Earning enough to enter the 24% bracket does not mean all your income is taxed at 24%, a point that trips up many filers.
What started as a wartime experiment and survived a constitutional crisis in 1895 is now embedded so deeply in American life that most workers see the tax withheld from every paycheck before they touch the money. The amendment’s 30 words made all of it possible, and more than a century of legislation and court decisions has built the rest on top.