Historical tax brackets in the United States start at a 1% floor and 7% ceiling in 1913, climb to a wartime peak of 94% in 1944, and settle at today’s seven-bracket range of 10% to 37%. The path between those points runs through two world wars, the Depression, decades of bracket creep, and a string of landmark reforms that reshaped not just the rates but what counted as taxable income in the first place.
1913: A Tax Only the Wealthy Paid
The 16th Amendment, ratified on February 3, 1913, gave Congress the power to levy an income tax without apportioning it among the states by population.1Ronald Reagan Presidential Library & Museum. Constitutional Amendments – Amendment 16 The Revenue Act of 1913 followed almost immediately, with a 1% “normal” tax on net income above $3,000 for a single person ($4,000 for a married couple) and a graduated surtax reaching 7% on income above $500,000.
Those thresholds were set high. Fewer than 1% of Americans owed anything. For nearly everyone else, the income tax was something that happened to other people.
World War I Pushes the Top Rate to 77%
Entry into World War I changed the math quickly. The War Revenue Act of 1917 and the Revenue Act of 1918 pushed the top marginal rate from 15% in 1916 to 67% in 1917 and then to 77% in 1918, with the highest bracket applying to income above $1 million. Exemption thresholds dropped at the same time, pulling more people into the system.
The 1920s brought a reversal. A series of revenue acts cut the top rate back down to 25% on income above $100,000 by 1925, where it stayed until the Depression collapsed federal revenue. The Revenue Act of 1932 raised the top rate from 25% to 63%, and the Revenue Act of 1935 pushed it to 79% on income above $5 million, effective with the 1936 tax year.
World War II and the 94% Peak
World War II turned the income tax from a class tax into a mass tax. In 1940, roughly 7% of the population paid income tax. By 1944, that figure had climbed to about 64%. Congress got there by slashing exemption thresholds so ordinary wages fell within the tax base, and by introducing payroll withholding so employers collected the tax from each paycheck before workers saw the money. Those two mechanical changes mattered more than any headline rate.
The headline rate did move too. The top marginal rate hit its all-time peak of 94% in 1944 and 1945, applying to taxable income above $200,000. The structure above it ran more than 20 tiers. The $200,000 threshold in 1944 dollars translates to roughly $3.4 million today, and generous deductions and preferentially taxed income categories shrank the real bite considerably.
The 1950s: 91% on Paper, 16.9% in Practice
Through the 1950s the top statutory rate held at 91%. The top 1% of earners paid an average effective federal income tax rate of about 16.9% during that decade. Add every state, local, and payroll tax, and the total effective rate for that group came to roughly 42%. High, but a long way from 91%.
The gap between posted rates and actual payments produced its own political problem. By 1966, 155 individual taxpayers with incomes above $200,000 paid zero federal income tax. The embarrassment pushed Congress to enact the predecessor of the Alternative Minimum Tax in 1969.2U.S. Department of the Treasury. Individual Alternative Minimum Tax
The first real break from postwar high rates came with the Revenue Act of 1964. Proposed by President Kennedy and signed by President Johnson, it cut the top rate from 91% to 70% and lowered the bottom rate from 20% to 14%.
Bracket Creep, Indexing, and the Two-Bracket Code
Through the 1970s, inflation pushed ordinary workers into brackets originally designed for the affluent. A raise that only kept pace with prices could still move a household into a higher bracket. The pressure for reform built through the decade.
The Economic Recovery Tax Act of 1981 answered on two fronts. It cut the top rate from 70% to 50%, and it indexed bracket thresholds to inflation starting with the 1985 tax year. Indexing drew less attention than the rate cut, but it solved bracket creep permanently and remains in force today.
The decade’s landmark was the Tax Reform Act of 1986. Congress collapsed more than a dozen brackets into two: 15% and 28%.3Joint Economic Committee. The Tax Reform Act of 1986 – A Primer The 28% top rate was the lowest since before the Great Depression. To pay for the cut, the law eliminated shelters, curtailed deductions, and closed loopholes. The bottom rate rose from 11% to 15%, the only major reform in the income tax’s history where the lowest rate went up while the highest came down.
Brackets Return: 1993 Through 2012
The two-bracket code lasted only a few years. The Omnibus Budget Reconciliation Act of 1993 added a 36% bracket and a 39.6% bracket at the top, returning the code to a multi-tier structure.4Congressional Budget Office. An Economic Analysis of the Revenue Provisions of OBRA-93 The 39.6% rate applied to taxable incomes above $250,000.
The Economic Growth and Tax Relief Reconciliation Act of 2001, the Bush tax cuts, reversed direction. It phased the top rate down from 39.6% to 35%, lowered rates across most brackets, and added a new 10% bracket at the bottom. Budget rules forced the whole package to sunset after 2010.
That expiration drove the fiscal cliff fight at the end of 2012. The American Taxpayer Relief Act of 2012 made the Bush cuts permanent for all but the highest earners, keeping brackets at 10%, 15%, 25%, 28%, 33%, and 35% for taxable income below $400,000 (single) or $450,000 (joint), with the 39.6% rate returning above those thresholds.
Two Affordable Care Act levies effectively raised the top federal rate further. A 3.8% net investment income tax applies to investment earnings when modified adjusted gross income exceeds $200,000 (single) or $250,000 (joint).5Internal Revenue Service. Topic No. 559, Net Investment Income Tax A 0.9% additional Medicare tax applies to wages and self-employment income above the same general thresholds.6Internal Revenue Service. Questions and Answers for the Additional Medicare Tax Those thresholds have never been indexed for inflation, so they pull in more taxpayers each year.
The TCJA and the One Big Beautiful Bill
The Tax Cuts and Jobs Act of 2017 kept the seven-bracket framework but lowered most rates, dropping the top rate from 39.6% to 37% and shifting thresholds so more income was taxed at lower rates.7Cornell Law Institute. Tax Cuts and Jobs Act of 2017 (TCJA) It also nearly doubled the standard deduction and eliminated the personal exemption. The individual provisions were written to sunset after December 31, 2025.
On July 4, 2025, President Trump signed the One Big Beautiful Bill Act, making the TCJA’s individual income tax provisions permanent.8The White House. President Trump’s One Big Beautiful Bill Is Now the Law The seven rate brackets of 10%, 12%, 22%, 24%, 32%, 35%, and 37% are now settled law. The expanded standard deduction and the zero personal exemption are also permanent.
The 2026 Brackets
With the OBBBA locking in the structure, the 2026 brackets reflect the annual inflation adjustment that has been standard since 1985.9Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
- 10%: Taxable income up to $12,400 (single) or $24,800 (joint)
- 12%: Over $12,400 up to $50,400 (single) or over $24,800 up to $100,800 (joint)
- 22%: Over $50,400 up to $105,700 (single) or over $100,800 up to $211,400 (joint)
- 24%: Over $105,700 up to $201,775 (single) or over $211,400 up to $403,550 (joint)
- 32%: Over $201,775 up to $256,225 (single) or over $403,550 up to $512,450 (joint)
- 35%: Over $256,225 up to $640,600 (single) or over $512,450 up to $768,700 (joint)
- 37%: Over $640,600 (single) or over $768,700 (joint)
The standard deduction for 2026 is $16,100 for single filers, $24,150 for heads of household, and $32,200 for married couples filing jointly. Personal exemptions remain at zero.
Why the Top Rate Has Never Told the Whole Story
One thread runs through every era: the gap between the top statutory rate and what high earners actually paid. In the 1950s, a 91% top bracket coexisted with an effective federal income tax rate for the top 1% of about 16.9%. Congress has consistently paired high headline rates with deductions, exclusions, preferential capital gains treatment, and income categories that simply don’t count. When reformers close those gaps, as the 1986 act tried to do, the headline rate can come down without necessarily changing how much the wealthy owe.
Capital gains illustrate the point. Long-term gains face preferential rates topping out at 20%, and even with the 3.8% net investment income tax added on, the top effective federal rate on long-term capital gains runs 23.8%, well below the 37% top rate on ordinary income. Rates matter. But reading tax history through the top bracket alone misses what counts as income, which deductions survive, and how investment gains are treated, and those pieces have moved as much as the headline numbers.