The Internal Revenue Code (IRC), formally the Internal Revenue Code of 1986, is the domestic portion of federal statutory

tax law Tax law or revenue law is an area of legal study in which public or sanctioned authorities, such as federal, state and municipal governments (as in the case of the US) use a body of rules and procedures (laws) to assess and collect taxes in a ...

in the United States, published in various volumes of the

United States Statutes at Large The ''United States Statutes at Large'', commonly referred to as the ''Statutes at Large'' and abbreviated Stat., are an official record of Acts of Congress and concurrent resolutions passed by the United States Congress. Each act and resolutio ...

, and separately as Title 26 of the

United States Code In the law of the United States, the Code of Laws of the United States of America (variously abbreviated to Code of Laws of the United States, United States Code, U.S. Code, U.S.C., or USC) is the official compilation and codification of the ...

(USC). It is organized topically, into subtitles and sections, covering income tax in the United States,

payroll tax Payroll taxes are taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their employees. By law, some payroll taxes are the responsibility of the employee and others fall on the em ...

es, estate taxes,

gift tax In economics, a gift tax is the tax on money or property that one living person or corporate entity gives to another. A gift tax is a type of transfer tax that is imposed when someone gives something of value to someone else. The transfer must ...

es, and

excise taxes file:Lincoln Beer Stamp 1871.JPG, upright=1.2, 1871 U.S. Revenue stamp for 1/6 barrel of beer. Brewers would receive the stamp sheets, cut them into individual stamps, cancel them, and paste them over the Bunghole, bung of the beer barrel so when ...

; as well as procedure and administration. The Code's implementing federal agency is the

Internal Revenue Service The Internal Revenue Service (IRS) is the revenue service for the United States federal government, which is responsible for collecting U.S. federal taxes and administering the Internal Revenue Code, the main body of the federal statutory ta ...

Origins of tax codes in the United States

Prior to 1874, U.S. statutes (whether in tax law or other subjects) were not codified. That is, the acts of Congress were not separately organized and published in separate volumes based on the subject matter (such as taxation, bankruptcy, etc.). Codifications of statutes, including tax statutes, undertaken in 1873 resulted in the

Revised Statutes of the United States The Revised Statutes of the United States (in citations, Rev. Stat.) was the first official codification of the Acts of Congress. It was enacted into law in 1874. The purpose of the ''Revised Statutes'' was to make it easier to research federal l ...

, approved June 22, 1874, effective for the laws in force as of December 1, 1873. Title 35 of the Revised Statutes was the Internal revenue title. Another codification was undertaken in 1878. In 1919, a committee of the U.S. House of Representatives began a project to recodify U.S. statutes, which eventually resulted in a new United States Code in 1926 (including tax statutes).

Internal Revenue Code of 1939

The tax statutes were re-codified by an Act of Congress on February 10, 1939 as the "Internal Revenue Code" (later known as the "Internal Revenue Code of 1939"). The 1939 Code was published as volume 53, Part I, of the

and as title 26 of the United States Code. Subsequent permanent tax laws enacted by the

United States Congress The United States Congress is the legislature of the federal government of the United States. It is bicameral, composed of a lower body, the House of Representatives, and an upper body, the Senate. It meets in the U.S. Capitol in Washing ...

updated and amended the 1939 Code.

Internal Revenue Code of 1954

On August 16, 1954, in connection with a general overhaul of the

, the IRC was greatly reorganized by the

83rd United States Congress The 83rd United States Congress was a meeting of the legislative branch of the federal government of the United States in Washington, D.C. from January 3, 1953, until January 3, 1955, during the last two weeks of the Truman administration, wi ...

and expanded (by Chapter 736, ). Ward M. Hussey was the principal drafter of the Internal Revenue Code of 1954. The code was published in volume 68A of the

. To prevent confusion with the 1939 Code, the new version was thereafter referred to as the "Internal Revenue Code of 1954" and the prior version as the "Internal Revenue Code of 1939". The lettering and numbering of subtitles, sections, etc., was completely changed. For example, section 22 of the 1939 Code (defining gross income) was roughly analogous to section 61 of the 1954 Code. The 1954 Code replaced the 1939 Code as title 26 of the

. The 1954 Code temporarily extended the Revenue Act of 1951's 5 percentage point increase in corporate tax rates through March 31, 1955, increased

depreciation In accountancy, depreciation is a term that refers to two aspects of the same concept: first, the actual decrease of fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wear, and second, the a ...

deductions by providing additional depreciation schedules, and created a 4 percent dividend tax credit for individuals.

Relationship to Title 26 of the United States Code

The Internal Revenue Code of 1954 was enacted in the form of a separate code by act of August 16, 1954, ch. 736, . The

Tax Reform Act of 1986 The Tax Reform Act of 1986 (TRA) was passed by the 99th United States Congress and signed into law by President Ronald Reagan on October 22, 1986. The Tax Reform Act of 1986 was the top domestic priority of President Reagan's second term. The ...

changed the name of the 1954 Code to the "Internal Revenue Code of 1986". In addition to being published in various volumes of the United States Statutes at Large, the Internal Revenue Code is separately published as Title 26 of the United States Code. The text of the Internal Revenue Code as published in title 26 of the U.S. Code is virtually identical to the Internal Revenue Code as published in the various volumes of the

.An apparently insignificant discrepancy between the wording in the Statutes at Large and the wording in some editions of the U.S. Code with respect to a provision of the Internal Revenue Code (specifically, the words "any papers" in the first sentence of is described by the U.S. Court of Appeals for the District of Columbia in the case of '' Tax Analysts v. Internal Revenue Serv.'', 214 F.3d 179 (D.C. Cir. 2000), in footnote 1, a

According to the Court, some versions of the U.S. Code show the text as "any paper" while the Statutes at Large version shows the text as "any papers". Of the 50 enacted titles, the Internal Revenue Code is the only volume that has been published in the form of a separate code.

Progressivity of the 1954 Code

With respect to the Income tax in the United States, federal income tax on individuals, the 1954 Code imposed a

progressive tax A progressive tax is a tax in which the tax rate increases as the taxable amount increases.Sommerfeld, Ray M., Silvia A. Madeo, Kenneth E. Anderson, Betty R. Jackson (1992), ''Concepts of Taxation'', Dryden Press: Fort Worth, TX The term ''progre ...

with 24 income brackets applying to tax rates ranging from 20% to 91%. For example, the following is a schedule showing the federal

marginal income tax rate In a tax system, the tax rate is the ratio (usually expressed as a percentage) at which a business or person is taxed. There are several methods used to present a tax rate: statutory, average, marginal, and effective. These rates can also be p ...

imposed on each level of

taxable income Taxable income refers to the base upon which an income tax system imposes tax. In other words, the income over which the government imposed tax. Generally, it includes some or all items of income and is reduced by expenses and other deductions. Th ...

of a single (unmarried) individual under the 1954 Code: * ''Source: Internal Revenue Code of 1954, (modified from text of the statute).'' * Relative GDP: 37.5 ** ''Source
Bureau of Economic Analysis historical GDP tables
'

Internal Revenue Code of 1986

References to the Internal Revenue Code in the

and other statutes of Congress subsequent to 1954 generally mean Title 26 of the Code as amended. The basic structure of the Title 26 remained the same until the enactment of the comprehensive revision contained in

, although of course individual provisions of the law were changed on a regular basis. Section 2 of the

provides (in part): :(a) Redesignation of 1954 Code. – The Internal Revenue Title enacted August 16, 1954, as heretofore, hereby, or hereafter amended, may be cited as the "Internal Revenue Code of 1986". :(b) References in Laws, Etc. – Except when inappropriate, any reference in any law, Executive order, or other document – ::(1) to the Internal Revenue Code of 1954 shall include a reference to the Internal Revenue Code of 1986, and ::(2) to the Internal Revenue Code of 1986 shall include a reference to the provisions of law formerly known as the Internal Revenue Code of 1954. Thus, the 1954 Code was renamed the ''Internal Revenue Code of 1986'' by section 2 of the

. The 1986 Act contained substantial amendments, but no formal re-codification. That is, the 1986 Code retained most of the same lettering and numbering of subtitles, chapters, subchapters, parts, subparts, sections, etc. The 1986 Code, as amended from time to time (and still published as title 26 of the United States Code), retains the basic structure of the 1954 Code.

Commonly misunderstood special definitions

* Employee * Wages * Many others can be found at https://www.law.cornell.edu/uscode/text/26/3401

Individual and corporate income tax

Section 1 of the Internal Revenue Code imposes the federal income tax on the taxable income of U.S. citizens and residents, and of estates and trusts. The corporate income tax is imposed by Internal Revenue Code section 11.

Organization

The organization of the Internal Revenue Code, as enacted in hundreds of Public Laws passed by the U.S. Congress since 1954, is identical to the organization of the Internal Revenue Code separately published as Title 26 of the U.S. Code. For example, section 162(e)(4)(B)(ii) ( 26 U.S.C. ) would be as follows: Title 26: Internal Revenue Code * Subtitle A: Income Taxes ** : Normal Taxes and Surtaxes *** : Computation of Taxable Income **** Part VI: Itemized Deductions for Individuals and Corporations ***** : Trade or business expenses ****** Subsection (e): Denial of deduction for certain lobbying and political expenditures ******* Paragraph (4): Other special rules ******** Sub-paragraph (B)): De minimis exception ********* Clause (ii): In-house expenditures The Internal Revenue Code is topically organized and generally referred to by section number (sections 1 through 9834). Some topics are short (e.g., tax rates) and some quite long (e.g., pension & benefit plans). Key IRC Topics By Section:

Subtitles

* A. Income Taxes (sections 1 through 1564)
As a further example, here are the chapters of this subtitle: ** (sections 1 through 1400U3) ** (sections 1401 through 1403) ** (sections 1441 through 1464) ** (sections 1471–1474) ** (sections 1491-1494) ** (sections 1501 through 1564) * B. Estate and Gift Taxes (sections 2001 through 2801) * C. Employment Taxes (sections 3101 through 3510) * D. Miscellaneous Excise Taxes (sections 4001 through 5000) * E. Alcohol, Tobacco, and Certain Other Excise Taxes (sections 5001 through 5891) * F. Procedure and Administration (sections 6001 through 7874) * G. The Joint Committee on Taxation (sections 8001 through 8023) * H. Financing of Presidential Election Campaigns (sections 9001 through 9042) * I. Trust Fund Code (sections 9500 through 9602) ("Trust Fund Code of 1981") * J. Coal Industry Health Benefits (sections 9701 through 9722) * K. Group Health Plan Requirements (sections 9801 through 9834)

List of commonly referenced sections

''(This is not intended to be a complete list of sections.)'' * Subtitle A: Income Taxes (–) ** : Normal Taxes and Surtaxes (–) *** Subchapter A: Determination of Tax Liability (–) **** Part I: Tax on Individuals (–) ***** Section 1: Tax imposed () ***** ... ***** Section 41: Credit for increasing research activities () ***** ... *** Subchapter B: Computation of Taxable Income (–) **** Part I: Definition of Gross Income, Adjusted Gross Income, Taxable Income, Etc. (–) ***** Section 61: Gross income defined () ***** ... ***** Section 63: Taxable income defined () ***** ... **** Part II: Items Specifically Included in Gross Income (–) ***** ... ***** Section 79: Group-term life insurance purchased for employees () ***** ... **** Part III: Items Specifically Excluded from Gross Income (–) ***** ... ***** Section 132(a): Fringe benefits excluded from gross income () ***** ... **** Part VI: Itemized Deductions for Individuals and Corporations (–) ***** ... ***** Section 162(2): Trade or business expenses () ***** ... ***** Section 179: Election to expense certain depreciable business assets () ***** ... ***** Section 183: Activities Not Engaged in for Profit () ***** ... **** Part VII: Additional Itemized Deductions for Individuals (–) ***** ... ***** Section 212: Expenses for production of income () ***** ... *** Subchapter C: Corporate Distributions and Adjustments (–) **** ... **** Part III: Corporate Organizations and Reorganizations (–) ***** ... ***** Subpart B: Effects on Shareholders and Security Holders (–) ****** ... ****** Section 355: Distribution of stock and securities of a controlled corporation () ****** ... **** ... *** Subchapter D: Deferred Compensation, Etc. (–) **** Part I: Pension, Profit-sharing, Stock Bonus Plas, etc. (–) ***** Subpart A: General Rule (–) ****** Section 401: Qualified pension, profit-sharing, and stock bonus plans ******* paragraph (a) (" 401(a)"): employer-sponsored

retirement plan A pension (, from Latin ''pensiō'', "payment") is a fund into which a sum of money is added during an employee's employment years and from which payments are drawn to support the person's retirement from work in the form of periodic payments ...

for employees of state and local governments and certain tax-exempt entities () ******* ... ******* paragraph (k) (" 401(k)"): employer-sponsored

() ****** ... ****** Section 402A ("

Roth 401(k) The Roth 401(k) is a type of retirement savings plan. It was authorized by the United States Congress under the Internal Revenue Code, section 402A, and represents a unique combination of features of the Roth IRA and a traditional 401(k) plan. Sinc ...

"): Optional treatment of elective deferrals as Roth contributions () ****** Section 403: Taxation of employee annuities ******* ... ******* paragraph (b) (" 403(b)"): employer-sponsored

at non-profit organizations () ****** ... ****** Section 408:

Individual Retirement Account An individual retirement account (IRA) in the United States is a form of pension provided by many financial institutions that provides tax advantages for retirement savings. It is a trust that holds investment assets purchased with a taxpayer's ear ...

s () ****** Section 408A:

Roth IRA A Roth IRA is an individual retirement account (IRA) under United States law that is generally not taxed upon distribution, provided certain conditions are met. The principal difference between Roth IRAs and most other tax-advantaged retirement pla ...

s () ****** ... ****** Section 409A: Inclusion in gross income of deferred compensation under nonqualified deferred compensation plans () ****** ... *** Subchapter E: Accounting Periods and Methods of Accounting (–) **** ... **** Part II: Methods of Accounting (–) ***** Subpart B: Taxable Year for Which Items of Gross Income Included (–) ****** ... ****** Section 457:

for governmental and certain non governmental employers () ****** ... ***** Subpart D: Inventories (–) ****** ... ****** Section 475: Mark to market accounting method for dealers in securities () ***** ... *** Subchapter F: Exempt Organizations (–) **** Part I: General Rule (–) ***** Section 501: Exemption from tax on corporations, certain trusts, etc. () ****** ... ****** paragraph (c) ("

501(c) A 501(c) organization is a nonprofit organization in the Law of the United States#Federal law, federal law of the United States according to Internal Revenue Code (26 U.S.C. § 501(c)) and is one of over 29 types of nonprofit organizations exe ...

"): List of exempt organizations () ******* subparagraph (1) (" 501(c)(1)"): corporations organized under Acts of Congress such as

Federal Credit Unions A credit union, a type of financial institution similar to a commercial bank, is a member-owned nonprofit organization, nonprofit financial cooperative. Credit unions generally provide services to members similar to retail banks, including depo ...

() ******* subparagraph (2) (" 501(c)(2)"): title-holding corporations for exempt organizations () ******* subparagraph (3) ("

501(c)(3) A 501(c)(3) organization is a United States corporation, trust, unincorporated association or other type of organization exempt from federal income tax under section 501(c)(3) of Title 26 of the United States Code. It is one of the 29 types of 50 ...

"): charitable, non-profit, religious, and educational organizations () ******* subparagraph (4) ("

501(c)(4) A 501(c) organization is a nonprofit organization in the Law of the United States#Federal law, federal law of the United States according to Internal Revenue Code (26 U.S.C. § 501(c)) and is one of over 29 types of nonprofit organizations exe ...

"): political education organizations () ******* subparagraph (6) (" 501(c)(6)"): business leagues and chambers of commerce () ******* subparagraph (7) (" 501(c)(7)"): recreational clubs () ***** ... **** Part VI: Political Organizations (§ 527) ***** Section 527:

Political organizations A political organization is any organization that involves itself in the political process, including political parties, non-governmental organizations, and special interest advocacy groups. Political organizations are those engaged in politi ...

() **** ... **** Part VIII: Certain Savings Entities (–) ***** Section 529: Qualified tuition programs () ***** Section 529A:

ABLE account An ABLE account, also known as a 529 ABLE or 529A account, is a state-run savings program for eligible people with disabilities in the United States. Rules governing ABLE accounts are codified in Internal Revenue Code section 529A, which was enacted ...

s for benefit of certain individuals with disabilities () ***** Section 530:

Coverdell Education Savings Account A Coverdell education savings account (also known as an education savings account, a Coverdell ESA, a Coverdell account, or just an ESA, and formerly known as an education individual retirement account), is a tax advantaged investment account in the ...

s () *** ... *** Subchapter N: Tax Based on Income From Sources Within or Without the United States (–) **** Part I: Source Rules and Other General Rules Relating To Foreign Income (–) ***** Section 861: Income from sources within the United States () ***** ... *** Subchapter O: Gain or Loss on Disposition of Property (–) **** ... **** Part III: Common Nontaxable Exchanges (–) ***** Section 1031: Exchange of property held for productive use or investment () ***** ... ***** Section 1041: Transfers of Property Between Spouses or Incident to Divorce () ***** ... * Subtitle C: Employment Taxes (–) ** ... ** : Collection of Income Tax at Source on Wages (–) *** Section 3401: Definitions ()

References

External links

U.S. Code Title 26
via

United States Government Printing Office The United States Government Publishing Office (USGPO or GPO; formerly the United States Government Printing Office) is an agency of the legislative branch of the United States Federal government. The office produces and distributes information ...

Title 26 at Cornell's Legal Information Institute

Bloomberg Tax Internal Revenue Code
continuously updated wit
Editor's Notes
{{USCTitles