Income tax By the 1860s, the progressive tax had become a grudgingly accepted element of the English fiscal system. The US federal government imposed the first personal income tax on August 5, 1861, to help pay for its war effort in the American Civil War - (3% of all incomes over US$800) (equivalent to $ in ). This tax was repealed and replaced by another income tax in 1862. It was only in 1894 that the first peacetime income tax was passed through the Wilson-Gorman tariff. The rate was 2% on income over $4000 (equivalent to $ in ), which meant fewer
Income tax in the United States of certain types of business expenses. Individuals are also allowed credits related to education expenses, retirement savings, child care expenses, some health care premiums, and a credit for each child. Each of the credits is subject to specific rules and limitations. Some credits are treated as refundable payments. Alternative Minimum Tax: All taxpayers are also subject to the Alternative Minimum Tax if their income exceeds certain exclusion amounts. This tax applies only if it exceeds regular income tax, and is reduced by some credits. Additional Medicare Tax: High-income earners may also have to pay an additional 0.9% tax on wages,