The Revenue Act of 1918, 40 Stat. 1057, raised

income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...

rates over those established the previous year. The bottom

tax bracket Tax brackets are the divisions at which tax rates change in a progressive tax system (or an explicitly regressive tax system, though that is rarer). Essentially, tax brackets are the cutoff values for taxable income—income past a certain point ...

was expanded but raised from 2% to 6%. The act simplified the tax structure created by the 1917 act. Instead of applying a "like normal tax" and a "like additional tax" to the 1916 act normal tax and additional tax it created a single tax structure with a Normal Tax and a Surtax. The top rate was increased to 77%, and applied to income above $1,000,000. The top rate of the

War Revenue Act of 1917 The United States War Revenue Act of 1917 greatly increased federal income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax g ...

had taxed all income above $2,000,000 at a 67% rate. The act was applicable to incomes for 1918. For 1919 and 1920 the top normal tax rate was reduced from 12 percent to 8%. This reduced the top marginal tax rate that combined normal tax and surtax from 77% to 73%. Even in 1918, only 5% of the population paid federal

es (up from 1% in 1913), and yet the income tax funded one-third of the cost of World War I.

Income Tax for Individuals

A Normal Tax and a Surtax were levied against the net income of individuals as shown in the following table. *Exemption of $1,000 for single filers and $2,000 for married couples and head of family; $200 exemption for each dependent under 18.

Inflation-adjusted numbers

Corrected for inflation
by CPI:

Notes

{{US_tax_acts 65th United States Congress 1918 in law United States federal taxation legislation