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In order to help pay for its war effort in the American Civil War, the United States government imposed its first personal income tax, on August 5, 1861, as part of the Revenue Act of 1861. Tax rates were 3% on income exceeding $600 and less than $10,000, and 5% on income exceeding $10,000. [8]
Treasury Regulations are the tax regulations issued by the United States Internal Revenue Service (IRS), a bureau of the United States Department of the Treasury.These regulations are the Treasury Department's official interpretations of the Internal Revenue Code [1] and are one source of U.S. federal income tax law.
A tax is imposed on net taxable income in the United States by the federal, most state, and some local governments. [4] Income tax is imposed on individuals, corporations, estates, and trusts. [5] The definition of net taxable income for most sub-federal jurisdictions mostly follows the federal definition. [6]
Title 28 (Judiciary and Judicial Procedure) is the portion of the United States Code (federal statutory law) that governs the federal judicial system. It is divided into six parts: Part I: Organization of Courts; Part II: Department of Justice; Part III: Court Officers and Employees; Part IV: Jurisdiction and Venue; Part V: Procedure
Certain minimum amounts of wage income are not subject to income tax withholding. Wage withholding is based on wages actually paid and employee declarations on federal and state Forms W-4. Social Security tax withholding terminates when payments from one employer exceed the maximum wage base during the year.
The Act also amended section 22 of the Internal Revenue Code of 1939 to provide a definition for "adjusted gross income". [3] It standardized the value of personal exemptions at $500 per person for those with adjusted gross income of $5,000 or more. [4] The provisions of the Act were generally effective for tax years that began after December ...
Under current law, long-term capital gains and dividend income are taxed at a maximum rate of 15 percent through 2008. For taxpayers in the 10 and 15 percent tax brackets, the tax rate is 5 percent through 2007 and zero in 2008. The Conference Report extends the rates effective in 2008 through 2010.
The act lowered federal income tax rates, decreasing the number of tax brackets and reducing the top tax rate from 50 percent to 28 percent. The act also expanded the earned income tax credit , the standard deduction , and the personal exemption , removing approximately six million lower-income Americans from the tax base.