Personal exemptions and lowest and highest bracket tax rates, and tax base for regular tax, tax years 1913-2005

Table A.—U.S. individual income tax: personal exemptions and lowest and highest bracket tax rates, and tax base for regular tax, tax years 1913-2005

Table A.–U.S. Individual Income Tax: Personal Exemptions and Lowest

and Highest Bracket Tax Rates, and Tax Base for Regular Tax, Tax

Years 1913-2005

[Amounts are in dollars.]

Personal exemptions [1]

Tax year

Single Married Dependents

persons couples

(1) (2) (3)

1913 3,000 4,000 N/A

1914 3,000 4,000 N/A

1915 3,000 4,000 N/A

1916 3,000 4,000 N/A

1917 1,000 2,000 200

1918 1,000 2,000 200

1919 1,000 2,000 200

1920 1,000 2,000 200

1921 1,000 [4] 2500 400

1922 1,000 [4] 2500 400

1923 1,000 [4] 2500 400

1924 1,000 2,500 400

1925 1,500 3,500 400

1926 1,500 3,500 400

1927 1,500 3,500 400

1928 1,500 3,500 400

1929 1,500 3,500 400

1930 1,500 3,500 400

1931 1,500 3,500 400

1932 1,000 2,500 400

1933 1,000 2,500 400

1934 1,000 2,500 400

1935 1,000 2,500 400

1936 1,000 2,500 400

1937 1,000 2,500 400

1938 1,000 2,500 400

1939 1,000 2,500 400

1940 800 2,000 400

1941 750 1,500 400

1942 500 1,200 350

1943 500 1,200 350

1944 [11] 500 [11] 1000 [11] 500

1945 [11] 500 [11] 1000 [11] 500

1946 500 1,000 500

1947 500 1,000 500

1948 [14] 600 [14] 1,200 600

1949 [14] 600 [14] 1,200 600

1950 [14] 600 (14] 1,200 600

1951 [14] 600 [14] 1,200 600

1952 [14] 600 [14] 1,200 600

1953 [14] 600 (14] 1,200 600

1954 [14] 600 [14] 1,200 600

1955 [14] 600 [14] 1,200 600

1956 [14] 600 [14] 1,200 600

1957 [14] 600 [14] 1,200 600

1958 [14] 600 [14] 1,200 600

1959 [14] 600 [14] 1,200 600

1960 [14] 600 [14] 1,200 600

1961 [14] 600 [14] 1,200 600

1962 [14] 600 [14] 1,200 600

1963 [14] 600 [14] 1,200 600

1964 [14] 600 [14] 1,200 600

1965 [14] 600 [14] 1,200 600

1966 [14] 600 [14] 1,200 600

1967 [141 600 [14] 1,200 600

1968 [14] 600 [14] 1,200 600

1969 [14] 600 [14] 1,200 600

1970 [14] 625 [14] 1,250 625

1971 [14] 675 [14] 1,350 675

1972 [14] 750 [14] 1,500 750

1973 [14] 750 [14] 1,500 750

1974 [14] 750 [14] 1,500 750

1975 [14,26] 750 [14,26] 1,500 [26] 750

1976 [14,27] 750 [14.27] 1,500 [27] 750

1977 [14,27] 750 [14,27] 1,500 [27] 750

1978 [14,27] 750 [14,27] 1,500 [27] 750

1979 [14] 1,000 [14] 2,000 1,000

1980 [14] 1,000 [14] 2,000 1,000

1981 [14] 1,000 (14] 2,000 1,000

1982 [14] 1,000 [14] 2,000 1,000

1983 [14] 1,000 [14] 2,000 1,000

1984 [14] 1,000 [14] 2,000 1,000

1985 [14,30] 1,040 [14,30] 2,080 [30] 1,040

1986 [14,30] 1,080 [14,30] 2,160 [30] 1,080

1987 [30] 1,900 [30] 3,800 [30] 1,900

1988 [30,32,33] 1,950 [30,32,33] 3,900 [30,32,33] 1,950

1989 [30,32,33] 2,000 [30,32,33] 4,000 [30,32,33] 2,000

1990 [30,32,33] 2,050 [30,32,33] 4,100 [30,32,33] 2,050

1991 [30,32] 2,150 [30,32] 4,300 [30,32] 2,150

1992 [30,32] 2,300 [30,32] 4,600 [30,32] 2,300

1993 [30,32] 2,350 [30,32] 4,700 [30,32] 2,350

1994 [30,32] 2,450 [30,32] 4,900 [30,32] 2,450

1995 [30,32] 2,500 [30,32] 5,000 [30,32] 2,500

1996 [30,32] 2,550 [30,32] 5,100 [30.32] 2,550

1997 [30,32] 2,650 [30,32] 5,300 [30,32] 2,650

1998 [30,32] 2,700 [30,32] 5,400 [30,32] 2,700

1999 [30,32] 2,750 [30,32] 5,500 [30.32] 2,750

2000 [30,32] 2,800 [30,32] 5,600 [30,32] 2,800

2001 [30,32] 2,900 [30,32] 5,800 [30,32] 2,900

2002 [30,32] 3,000 [30,32] 6,000 [30,32] 3,000

2003 [30,32] 3,050 [30,32] 6,100 [30,32] 3,050

2004 [30,32] 3,100 [30,32] 6,200 [30,32] 3,100

2005 [30,32] 3,200 [30,32] 6,400 [30,32] 3,200

Tax rates for regular tax–

Lowest bracket

Tax year Tax Taxable

rate [2] income

(percent) under–[3]

(4) (5)

1913 1.0 20,000

1914 1.0 20,000

1915 1.0 20,000

1916 2.0 20,000

1917 2.0 2,000

1918 6.0 4,000

1919 4.0 4,000

1920 4.0 4,000

1921 4.0 4,000

1922 4.0 4,000

1923 [5] 3.0 4,000

1924 [6] 1.5 4,000

1925 [7] 1.125 4,000

1926 [7] 1.125 4,000

1927 [7] 1.125 4,000

1928 [8] 1.125 4,000

1929 [8] 0.375 4.000

1930 [8] 1.125 4,000

1931 [8] 1.125 4,000

1932 4.0 4,000

1933 4.0 4,000

1934 [9] 4.0 4,000

1935 [9] 4.0 4,000

1936 [9] 4.0 4,000

1937 [9] 4.0 4,000

1938 [9] 4.0 4,000

1939 [9] 4.0 4,000

1940 [9,10] 4.4 4,000

1941 [9] 10.0 2,000

1942 [9] 19.0 2,000

1943 [9] 19.0 2,000

1944 23.0 2,000

1945 23.0 2,000

1946 [13] 19.0 2,000

1947 [13] 19.0 2,000

1948 [15] 16.6 4,000

1949 [15] 16.6 4,000

1950 (16] 17.4 4,000

1951 20.4 4,000

1952 22.2 4,000

1953 22.2 4,000

1954 20.0 4,000

1955 20.0 4,000

1956 20.0 4,000

1957 20.0 4,000

1958 20.0 4,000

1959 20.0 4,000

1960 20.0 4,000

1961 20.0 4,000

1962 20.0 4,000

1963 20.0 4,000

1964 16.0 1,000

1965 14.0 1,000

1966 14.0 1,000

1967 14.0 1,000

1968 14.0 1,000

1969 14.0 1,000

1970 14.0 1,000

1971 14.0 1,000

1972 14.0 1,000

1973 14.0 1,000

1974 [25] 14.0 1,000

1975 14.0 1,000

1976 14.0 1,000

1977 [28] 14.0 [28] 3,200

1978 [28] 14.0 [28] 3,200

1979 [28] 14.0 [28] 3,400

1980 [28] 14.0 [28] 3,400

1981 [28,29] 14.0 [28] 3,400

1982 [28] 12.0 [28] 3,400

1983 [28] 11.0 [28] 3,400

1984 [28] 11.0 [28] 3,400

1985 [28] 11.0 [28,31] 3,540

1986 [28] 11.0 [28,31] 3,670

1987 11.0 [31] 3,000

1988 [34] 15.0 [31,35] 29,750

1989 [34,35] 15.0 [31,35] 30,950

1990 [34,35] 15.0 [31,35] 32,450

1991 15.0 [31] 34,000

1992 15.0 [31] 35,800

1993 15.0 [31] 36,900

1994 15.0 [31] 38,000

1995 15.0 [31] 39,000

1996 15.0 [31] 40,100

1997 15.0 [31] 41,200

1998 15.0 [31] 42,350

1999 15.0 [31] 43,050

2000 [36] 15.0 [31] 43,850

2001 [37] 10.0 [31,38] 6,000

2002 10.0 [31] 12,000

2003 10.0 [31] 14,000

2004 10.0 (31] 14,300

2005 10.0 [31] 14,600

Tax rates for regular tax–

Lowest bracket

Tax year Tax Taxable

rate [2] income

(percent) over-[3]

(6) (7)

1913 7.0 500,000

1914 7.0 500,000

1915 7.0 500,000

1916 15.0 2,000,000

1917 67.0 2,000,000

1918 77.0 1,000,000

1919 73.0 1,000,000

1920 73.0 1,000,000

1921 73.0 1,000,000

1922 58.0 200,000

1923 [5] 43.5 200,000

1924 46.0 500,000

1925 25.0 100,000

1926 25.0 100,000

1927 25.0 100,000

1928 25.0 100,000

1929 24.0 100,000

1930 25.0 100,000

1931 25.0 100.000

1932 63.0 1,000,000

1933 63.0 1,000,000

1934 63.0 1,000,000

1935 63.0 1,000,000

1936 79.0 5,000,000

1937 79.0 5,000,000

1938 79.0 5,000,000

1939 79.0 5,000,000

1940 [10] 81.1 5,000,000

1941 81.0 5,000,000

1942 88.0 200,000

1943 88.0 200,000

1944 [12] 94.0 200,000

1945 [12] 94.0 200,000

1946 [13] 86.45 200,000

1947 [13] 86.45 200,000

1948 [15] 82.13 400,000

1949 [15] 82.13 400,000

1950 [16] 84.36 400,000

1951 [17] 91.0 400,000

1952 [18] 92.0 400,000

1953 [18] 92.0 400,000

1954 [19] 91.0 400,000

1955 (19] 91.0 400,000

1956 [19] 91.0 400,000

1957 [19] 91.0 400,000

1958 [19] 91.0 400,000

1959 [19] 91.0 400,000

1960 [19] 91.0 400,000

1961 [19] 91.0 400,000

1962 [19] 91.0 400,000

1963 [19] 91.0 400,000

1964 77.0 400,000

1965 70.0 200,000

1966 70.0 200,000

1967 70.0 200,000

1968 [20] 75.25 200,000

1969 [21] 77.0 200,000

1970 [22] 71.75 200,000

1971 (23] 70.0 200,000

1972 [24] 70.0 200,000

1973 [24] 70.0 200,000

1974 [24,25] 70.0 200,000

1975 [24] 70.0 200,000

1976 [24] 70.0 200,000

1977 [24] 70.0 203,200

1978 [24] 70.0 203,200

1979 [24] 70.0 215,400

1980 [24] 70.0 215,400

1981 [24,29] 69.125 215,400

1982 50.0 85,600

1983 50.0 109,400

1984 50.0 162,400

1985 50.0 [31] 169,020

1986 50.0 [31] 175,250

1987 38.5 [31] 90,000

1988 [34,35] 28.0 [31,35] 29,750

1989 [34,35] 28.0 [31,35] 30,950

1990 [34,35] 28.0 [31,35] 32,450

1991 31.0 [31] 82,150

1992 31.0 [31] 86,500

1993 39.6 [31] 250,000

1994 39.6 [31] 250,000

1995 39.6 [31] 256,500

1996 39.6 [31] 263,750

1997 39.6 (31] 271,050

1998 39.6 [31] 278,450

1999 39.6 [31] 283,150

2000 [36] 39.6 [31] 288,350

2001 [37] 39.1 [31,38] 297,350

2002 38.6 [31] 307,050

2003 35.0 [31] 311,950

2004 35.0 [31] 319,100

2005 35.0 [31] 326,450

N/A-Not applicable.

[1] Personal exemption amounts were deducted at different points in

the tax computation. depending on the tax year. For some of the

earlier years, they were deducted only from the statutory “net

income” subject to the basic “normal tax,” for other years, only

from the “net income” subject to the “surtax,” and, for still other

years, from the “net income” subject to both normal tax and surtax.

(Footnote 2, below, includes a description of “normal tax” and

“surtax.”) For more recent years, personal exemptions have been

deducted in computing “taxable income,” the current tax base for

“regular” tax purposes.

[2] Tax rates shown in this table are for the “regular” income tax,

i.e., for “normal tax” and “surtax,” applicable to U.S. citizens

and residents. Therefore, the rates exclude provisions unique to

nonresident aliens. Tax rates exclude the effect ax credits (which

reduce the tax liability), except as noted, and several specific

add-on or other taxes applicable to all or some tax years. Excluded

are the “war excess profits tax” (1917), “victory tax” (1942-1943).

Social Security “self-employment tax” (starting with 1951), tax

under the “income averaging” provisions (1964-1986) and under the

farm income averaging provisions (starting with 1998), and the

“recapture taxes” resulting from having to recompute and pay back

certain tax credits in later years (starting with 1963), the

“maximum tax” on “earned income” or on “personal service

income”(1971-1981), the “minimum tax” on “tax preferences”

(1970-1983), and the “alternative minimum tax” on “tax preferences”

(starting with 1979). Also excluded are such other taxes as the tax

on recipients of accumulation distributions of trusts (starting

with 1954) and the “special averaging tax” or “multiple recipient

special averaging tax” on recipients of lump-sum distributions from

qualified retirement plans (starting with 1974). In addition, Table

A excludes the taxes associated with the preferential treatment of

capital gains, starting with 1922 (although certain gains received

preferential treatment as early as 1918). At various times, these

treatments have taken the form of special tax rates, special

definitions; different asset holding periods; ceilings on taxes,

and exclusions from income. Included among these special treatments

were “alternative tax” (1938-1986) and its variations for the

earlier years, although all of these taxes were in some way tied to

the a structure for regular tax. Until 1948, a single set of tax

rates applied to all taxpayers, regardless of marital or filing

status, and married couples filing joint returns were taxed on the

combined income of each spouse. However, a second, lower set of

rates was introduced, starting with 1948, for married couples fling

jointly. (To simplify the Table A presentation for these more

recent years, only the lowest and highest tax rates for married

persons fling jointly are shown.) Under this change, the combined

tax of husband and wife became twice the combined tax that would

have applied if their combined “taxable income” (“net income” for

years before 1954) were cut in half. Thus, taxpayers using the

joint return filing status “split” their incomes for tax purposes,

in effect doubling the width of their taxable income (or net

income) size “brackets.” The lowest and highest tax rate brackets

shown in columns 4 and 6 in Table A are, therefore, the brackets

for married couples fling jointly that result from taking into

account this doubling of the bracket widths. Starting with 1952, a

third set of rates was introduced (not shown) for “heads of

household,” i.e., for unmarried individuals who paid over half the

cost of maintaining a home for a qualifying person (e.g., a child

or parent), or for certain married individuals who had lived apart

from their spouses for the last 6 months of the tax year. This

filing status was liberalized, starting with 1970, and provides

approximately half the advantage of the income-splitting described

above. Starting with 1954, the full benefits of income splitting

allowed married couples filing jointly (i.e., the same tax rates

and taxable income brackets) were extended to a new, fourth filing

status, “surviving spouse” (i.e., individuals widowed for 1 to 2

years following the death of a spouse, provided they had a

dependent child and had not remarried). The remaining filing status

was for “single persons,” who used the rates formerly applicable to

taxpayers in general. However, these latter rates were moderated,

starting with 1969, by limiting the tax so that it would not exceed

20 percent more than the tax on married couples fling jointly. One

result of the 1969 law change was that certain married couples

filing jointly had to pay more tax than they would have paid if

each spouse fhad fled separately. To help mitigate this effect, a

special deduction in computing adjusted gross income was allowed

for 1982-1986 for two-earner couples filing jointly. This deduction

was initially 5 percent of the lesser of $30.000 or the “earned

income” of the spouse with the lesser earnings. The percentage was

increased to 10 percent, starting with 1983. The deduction

provision was repealed, starting with 1987, when new, lower rates

and a reduced number of tax brackets began. For tax years preceding

1954, the lowest tax rate, as shown in Table A, was either the rate

for the basic “normal tax” (if there was just one rate for normal

tax) or the lowest of the several rates for “normal tax” (if there

was more than one rate for normal tax). The highest tax rate was

the sum of the uppermost of the graduated rates (if any) for normal

tax, plus the uppermost of the additional, graduated “surtax”

rates, provided that both rates were applied to the same income.

For example, for 1932, there were two graduated rates for normal

tax, 4 percent (on the first $4,000 of income) and 8 percent (on

all income over $4,000), and graduated rates for “surtax” that

ranged from 1 percent to 55 percent. In Table A, the lowest rate

for 1932 is, therefore, shown as 4 percent (the lower of the two

normal tax rates) and the highest rate as 63 percent (the sum of

the 8-percent higher, graduated rate for normal tax on income over

$4,000, plus 55 percent, the highest of the graduated, surtax

rates, on income over $1 million.). As another example, for 1941,

there was just one rate for normal tax, 4 percent, but it applied

to all income. The lowest of the surtax rates, 6 percent, was

applied to all income under $2,000, so that income under $2,000 was

taxed at both the 4-percent normal tax rate and the 6-percent

surtax rate. Therefore, the lowest rate shown in Table A for 1941

is 10 percent, the sum of these two tax rates. The highest rate is

the sum of the 4-percent normal tax on total statutory “net

income,” plus the highest graduated surtax rate, 77 percent on

income over $5 million, so that income over $5 million was taxed at

81.0 percent, the sum of the two rates. For tax years starting with

1954, normal tax and surtax rates were, in effect, combined into a

single rate structure.

[3] The definition of the income base (and, thus. the tax “bracket”

boundaries) to which the tax rates were applied differs over the

years, depending on how the following were determined and figured:

statutory adjustments to or exclusions from income, personal

exemptions, itemized deductions expenditures, were sometimes

described as income “credits”): standard deductions, the various

thresholds and ceilings, and statutory “taxable income” (and its

predecessor “net income”). Therefore, the lowest and highest

taxable income amounts, as shown in Table A, are not comparable for

all years, and the amounts described as for statutory taxable

income for tax years preceding 1954 are actually for statutory net

income. (Statutory net income was income after subtracting

deductions but, for most years, was before subtracting personal

exemptions. Statutory taxable income was after subtracting both

deductions and personal exemptions. Taxable income is the tax base

for recent years. Net income required certain adjustments to arrive

at the tax base, depending on whether the income was subject to

normal tax, surtax, or both). See also footnote 2, above.

[4] For 1921-1923, the personal exemption amount for married

couples (column 2) increased to $2,000 if statutory “net income”

exceeded $5,000.

[5] For 1923, the lax rates shown (columns 4 and 6) are after a

25-percent statutory credit or refund.

[6] For 1924, the lowest tax rate (column 4) is after reduction by

an “earned income credit,” equal to 25 percent of the “normal tax”

on the first $5,000 of total statutory “net income” and the normal

tax on the first $10,000 of “earned net income,” but limited to 25

percent of the normal tax on total net income.

[7] For 1925-1927, the lowest tax rate (column 4) is after

reduction by an “earned income credit” equal to 25 percent of the

total tax on the first $5,000 of total statutory “net income” and

the total tax on the first $20,000 of “earned net income,” but

limited to 25 percent of the total tax on earned net income (not to

exceed 25 percent of the sum of “normal tax” on total net income

plus the “surtax” on earned net income.)

[8] For 1928-1931, the lowest tax rate (column 4) is after

reduction by an “earned income credit” equal to 25 percent of the

total tax on the first $5,000 of total statutory “net income” and

the total tax on the first $30,000 of “earned net income,” but

subject to the same limitations described in footnote 7, above. For

1929 only there was a special reduction in normal tax rates as

provided for in a joint resolution of congress.

[9] For 1934-1943, the tax rate (column 4) excludes the effect of

an “earned income credit,” allowed as a deduction equal to 10

percent of the first $14,000 of “earned net income” (before credit)

and the first $3,000 of total statutory “net income” (before

credit), but limited to 10 percent of earned net income (not to

exceed 10 percent of total income).

[10] For 1940, lax rates (columns 4 and 6) include “defense tax,”

computed as 10 percent of the total “regular” tax, but limited to

10 percent of statutory “net income” in excess of the total regular

tax.

[11] For 1944-1945, the personal exemption amounts (columns 1-3)

were for “surtax” purposes only. The exemption for basic “normal

tax” purposes was $500 per tax return, augmented by the “earned

income” of the spouse, up to $500, on joint returns.

[12] For 1944-1945, the highest tax rate (column 6) was subject to

a maximum effective rate limitation equal to 90 percent of statutory

“net income.”

[13] For 1946-1947, tax rates (columns 4 and 6) are the effective

rates after a statutory 5-percent reduction of combined “tentative

normal tax and surtax.” The highest rate (column 6) was subject to

a maximum effective rate limitation equal to 85.5 percent of

statutory “net income.”

[14] For 1948-1986, in addition to the personal exemptions (columns

1-2), there were additional personal exemptions for blind

taxpayers) and for taxpayers(s) age 65 or over.

[15] For 1948-1949, tax rates (columns 4 and 6) are the effective

rates after statutory reductions ranging from 17.0 percent of the

first $400 of combined “tentative normal tax and surtax” to 9.75

percent of combined tentative normal tax and surtax over $100,000.

The highest tax rate (column 6) was subject to a maximum effective

rate limitation equal to 77.0 percent of statutory “net income.”

[16] For 1950, tax rates (columns 4 and 6) are the effective rates

after statutory reductions ranging from 13.0 percent of the first

$400 of combined “tentative normal tax and surtax” to 7.3 percent

of combined tentative normal tax and surtax over $100,000. The

highest tax rate (column 6) was subject to a maximum effective rate

limitation equal to 87.0 percent of statutory “net income.”

[17] For 1951, the highest tax rate (column 6) was subject to a

maximum effective rate limitation equal to 87.2 percent of

statutory “net income.”

[18] For 1952-1953, the highest tax rate (column 6) was subject to

a maximum effective rate limitation equal to 88.0 percent of

statutory “net income.”

[19] For 1954-1963, the highest tax rate (column 6) was subject to

a maximum effective rate limitation equal to 87.0 percent of

statutory “taxable income.”

[20] For 1968, the highest tax rate (column 6) includes a Vietnam

War surcharge equal to 7.5 percent of tax (as defined for this

purpose). However, this surcharge did not apply to “regular” tax

generated at the lowest rate.

[21] For 1969, the highest tax rate (column 6) includes a Vietnam

War surcharge equal to 10 percent of tax (as defined for this

purpose). However. this surcharge did not apply to “regular” tax

generated at the lowest rate.

[22] For 1970, the highest tax rate (column 6) includes a Vietnam

War surcharge equal to 2.5 percent of tax (as defined for this

purpose). However, this surcharge did not apply to “regular” tax

generated at the lowest rate.

[23] For 1971, “earned net income” was subject to a “maximum tax”

of 60 percent (not shown in column 6).

[24] For 1972-1981, “earned net income” (broadened to become

“personal service net income” after 1976) was subject to a “maximum

tax” of 50 percent (not shown in column 6).

[25] For 1974, tax rates (columns 4 and 6) do not take into account

a statutory rebate of 10 percent of total income tax after credits.

In general, the minimum rebate was $100 and the maximum, $200, but

could not exceed the tax liability.

[26] For 1975, a $30-per-capita tax credit was allowed in addition

to the personal exemptions shown in columns 1-3.

[27] For 1976-1978, a tax credit was allowed, in addition to the

personal exemptions shown in columns 1-3, that was equal to the

larger of $35 per capita or 2 percent of the first $9,000 of

statutory “taxable income.”

[28] For 1977-1986, in order to help preserve the conceptual

comparability of the amounts shown with those for earlier and later

years, the lowest tax rates in column 4 and the lowest “taxable

income” amounts in column 5 exclude the so called “zero tax rate”

and the “zero bracket amount,” which were unique to the tax

computation for these 10 years.

[29] For 1981, tax rates (columns 4 and 6) are after a 1.25-percent

statutory tax credit.

[30] Starting with 1985, the personal exemption amounts (columns

1-3) reflect annual adjustments for inflation, using the U.S.

Department of Labor Consumer Price Index for Urban Consumers

(“CPS-U”).

[31] Starting with 1985, tax “bracket” boundaries (columns 5 and 7)

were indexed for inflation, using the U.S. Department of Labor

Consumer Price Index (as described in footnote 30).

[32] Starting with 1988, the amount eligible to be deducted for

personal exemptions (columns 1-3) was phased out for certain

high-income taxpayers. For 1988-1990. this was accomplished as part

of the tax computation (see footnote 34, below).

[33] For 1988-1990, excludes the effect on certain high-income

taxpayers of the phaseout of the amount deductible for personal

exemptions (columns 1-3).

[34] For 1988-1990, the tax rates (columns 4 and 6) exclude the

effects on certain high-income taxpayers of the phaseout both of

the benefit of the 15-percent tax rate (compared to the 28-percent

rate) and the amount deductible for personal exemptions. This

phaseout was accomplished by imposing an additional, 5-percent tax

on income above certain levels, based on fling status, thus

creating a -temporary” 33-percent tax rate. At the point where the

taxpayer had completely phased out the two benefits by use of the

33-percent rate, the tax rate on any remaining taxable income above

the phaseout range returned to 28 percent (see also footnote 35).

As Table A shows. beginning with 1991, this phaseout was replaced

by including an additional, 31-percent, graduated rate for taxable

incomes above certain levels. Two other, higher, graduated rates

were subsequently added, starting with 1993, the higher of which is

shown in Table A.

[35] For 1988-1990, the 15-percent tax rate (column 4), which

applied to the first 329,750 of statutory “taxable income” (column

5), gradually increased to the top “brackets” rate, 28 percent

(column 6), when taxable income (included in column 7) reached

between $71,900 and $149,250. This was the range at which the

15-percent rate was phased out for certain high-income taxpayers,

all of whose income was then effectively taxed at the higher

28-percent rate through use of the “temporary” 33-percent rate (see

footnote 34. above, for additional information). The boundaries of

the phaseout range were adjusted for inflation for 1989-1990,

although the top tax rate on the taxable income above that covered

by the phaseout range remained 28 percent. Therefore, the top

taxable income and top tax bracket rate shown in Table A for

1988-1990 do not take into account the higher, 33-percent,

“temporary” phaseout rate.

[36] For 2000, the tax rates (columns 4 and 6) do not reflect a

special statutory refund. partially offset for 2001, of between $300

and $600, depending on the size of income tax for 2000 and filing

status. See also footnote 37, below.

[37] For 2001, the tax rate (columns 4 and 6) does not reflect a

5-percent tax credit of up to $300, $500, or $1,000, depending on

the filing status. This credit effectively reduced the lowest rate

on the income shown in column 5 from 15 percent to 10 percent, in

lieu of an explicit 10-percent rate. However, the credit was

reduced by the amount of the special statutory refund made in 2001

(based on tax for 2000), described in footnote 36, above. The 10

percent rate was only for dependents.

[38] For the change in the lowest tax “bracket” boundary (columns 5

and 7) for 2001, see footnotes 36 and 37, above.

SOURCE: Advisory Commission on Intergovernmental Relations,

Significant Features of Fiscal Federalism. Volume I, Budget

Processes and Tax Systems, 1995. September 1996 (based, in part, on

Tax Foundation, Facts and Figures on Government Finance, 1988-89

edition, 1988), Pechman, Joseph A., Federal Tax Policy, fifth

edition, The Brookings Institution, 1987 (based on relevant public

laws and reports prepared by the Congressional Joint Economic

Committee, including The Federal Revenue System: Facts and

Problems, 1961, and The Federal Tax System: Facts and Problems,

1964); Statistics of Income-Part I (in particular, the historical

synopses of laws included as appendices in the reports for

1949-1953) and Statistics of Income–Individual Income Tax Returns

(annually, for 1954-1988); and relevant public laws and reports

issued by the Congressional Joint Committee on Taxation for

subsequent years, as well as reports, such as Overview of the

Federal Tax System for 1990, 1991, and 1994. Committee on Ways and

Means, U.S. House of Representatives, and reports issued by the

Congressional Joint Committee on Taxation for subsequent years,

including Overview of Present Law and Economic Analysis Relating to

Marginal Tax Rates and the Presidents Individual Income Tax Rate

Proposals, 2001.

COPYRIGHT 2006 U.S. Government Printing Office

COPYRIGHT 2008 Gale, Cengage Learning