Revenue Act of 1916
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The United States Revenue Act of 1916, (ch. 463, 39 Stat. 756, September 8, 1916) raised the lowest income tax rate from 1 % to 2 % and raised the top rate to 15 % on taxpayers with incomes above $2 million. (Previously, the top rate had been 7 % on income above $500,000.)
The entry of the United States into World War I greatly increased the need for revenue.
An excess profits tax was introduced and the modern estate tax was imposed.
The act was applicable to incomes for 1916.
[edit] Income Tax Table for Individuals
A Normal Tax and an Additional Tax were levied against the net income of individuals as shown in the following table.
| Revenue Act of 1916 Normal Tax and Additional Tax on Individuals |
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| Net Income (dollars) |
Normal Rate (percent) |
Additional Rate (percent) |
Combined Rate (percent) |
| 0 | 2 | 0 | 2 |
| 20,000 | 2 | 1 | 3 |
| 40,000 | 2 | 2 | 4 |
| 60,000 | 2 | 3 | 5 |
| 80,000 | 2 | 4 | 6 |
| 100,000 | 2 | 5 | 7 |
| 150,000 | 2 | 6 | 8 |
| 200,000 | 2 | 7 | 9 |
| 250,000 | 2 | 8 | 10 |
| 300,000 | 2 | 9 | 11 |
| 500,000 | 2 | 10 | 12 |
| 1,000,000 | 2 | 11 | 13 |
| 1,500,000 | 2 | 12 | 14 |
| 2,000,000 | 2 | 13 | 15 |
[edit] Inflation-adjusted numbers
Corrected for inflation by CPI:
| 1916 dollars | 2005 dollars |
|---|---|
| $500,000 | $8,958,716 |
| $2,000,000 | $35,834,862 |
[edit] Notes
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