The federal income tax didn't exist for the first 137 years of the country. Here's how the top tax rate has swung — from 7% to 94% to 37% — across two and a half centuries.
1913: 7% · 1944: 94% · 2026: 37%America turns 250 on July 4, 2026 — but the federal income tax is only 113 years old. For more than half the country's history, it didn't exist at all.
From 1776 until 1913, the federal government funded itself almost entirely through tariffs on imported goods and excise taxes on items like alcohol and tobacco. A temporary income tax was introduced during the Civil War (1861–1872) to fund the Union war effort, then repealed once the debt was paid down. The permanent income tax didn't arrive until the 16th Amendment was ratified in 1913.
When the modern income tax began in 1913, the top rate was just 7% — and it only applied to income above $500,000, worth roughly $16.3 million in 2026 dollars. The vast majority of Americans paid no federal income tax at all; it was designed to reach only the wealthiest sliver of the population.
1913: 7% top rate, applying only above $500,000 (~$16.3M today)
2026: 37% top rate, applying above $640,600 (single filer)
To help fund the second half of World War II, the top marginal rate hit 94% in 1944 and 1945 — the highest in US history — on income above $200,000, about $3.5 million in 2026 dollars.
The top marginal federal income tax rate has swung dramatically over the past 113 years.
| Year | Top Marginal Rate |
|---|---|
| 1913 (income tax begins) | 7% |
| 1918 (WWI) | 77% |
| 1925 | 25% |
| 1932 (Depression-era hikes) | 63% |
| 1944–45 (WWII peak) ★ | 94% |
| 1964 (Kennedy tax cut) | 77% |
| 1982 (early Reagan) | 50% |
| 1988–90 (lowest modern rate) | 28% |
| 2003 (Bush tax cuts) | 35% |
| 2013 | 39.6% |
| 2026 (today) ★ | 37% |
The average top rate across all 113 years the income tax has existed is roughly 60% — meaning today's 37% is well below the historical norm, and close to the 28% low point of the late 1980s.
The federal income tax became permanent in 1913 after the 16th Amendment was ratified. A temporary income tax existed from 1861 to 1872 to fund the Civil War, but it was repealed. For 137 of America's first years, there was no federal income tax at all.
The top marginal federal income tax rate peaked at 94% in 1944 and 1945, on income above $200,000 (about $3.5 million in 2026 dollars), to help fund World War II. It only applied to a small number of top earners, and deductions and shelters meant the effective rate they actually paid was closer to 60%.
For the first 137 years of the country, the federal government funded itself primarily through tariffs on imported goods and excise taxes on items like alcohol and tobacco. There was no federal income tax until 1913.
The top federal income tax rate in 2026 is 37%, applying to taxable income above $640,600 for single filers and $768,700 for married couples filing jointly.
Today's 37% top rate is below the roughly 60% average top rate since the income tax began in 1913, and it's close to the lowest levels in the tax's 113-year history, similar to the 28% top rate briefly in effect from 1988 to 1990.
As of 2026, the federal income tax has existed for 113 years, since the 16th Amendment was ratified in 1913 — less than half of the nation's 250-year history.
Use our free calculator to get a full breakdown of your take-home pay under 2026's tax rates.
Calculate My Take-Home Pay →Historical tax rates sourced from IRS and Tax Foundation historical data. 2026 dollar equivalents are approximate inflation adjustments. Effective rates paid by taxpayers in any era were often lower than the top marginal rate due to deductions, exemptions, and income structure. Not financial or legal advice.