when did federal income tax came into being
Income tax 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Civil War - (3% of all incomes over US$800) (equivalent to $21,800 in 2017).[11][verification needed] This tax was repealed and replaced by another income tax in 1862.[12][verification needed] It was only in 1894 that the first peacetime income tax was passed through the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 $113,000 in 2017), which meant fewer than 10% of households would pay any. The purpose of the income tax was to make up for revenue that would be lost by tariff reductions.[13] The US Supreme Court ruled the income tax unconstitutional, the 10th amendment forbidding any powers not expressed in the US Constitution, and there being no power to impose any other than a direct tax by apportionment.
Sixteenth Amendment to the United States Constitution The Sixteenth Amendment (Amendment XVI) to the United States Constitution allows the Congress to levy an income tax without apportioning it among the states or basing it on the United States Census. This amendment exempted income taxes from the constitutional requirements regarding direct taxes, after income taxes on rents, dividends, and interest were ruled to be direct taxes in the court case of Pollock v. Farmers' Loan & Trust Co. (1895). The amendment was adopted on February 3, 1913.