First Income Tax: Congress Finances the Civil War
Congress passed the Revenue Act of 1861 on August 5, introducing the first federal income tax in American history to finance the Civil War. The tax imposed a 3% levy on incomes over $800, roughly $26,000 in today's money, affecting less than 3% of the population. A graduated version followed in 1862, taxing incomes over $600 at 3% and incomes over $10,000 at 5%. The tax raised $55 million in its first year and proved that the federal government could fund itself through direct taxation rather than relying solely on tariffs and land sales. Congress repealed the income tax in 1872, but the principle was established. The 16th Amendment made income tax permanent in 1913.
August 5, 1861
165 years ago
Key Figures & Places
American Civil War
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income tax
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Federal government of the United States
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United States government
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1872
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Revenue Act of 1861
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American Civil War
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Federal government of the United States
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Income tax
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Revenue Act of 1861
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1872
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