The Income Tax’s Centennial: What a Change

The U.S. income tax started in 1913. Previously, revenue came from tariffs or excise taxes on items such as alcohol and tobacco.

In 1913, individuals who earned the equivalent of $5 million in 2013 dollars had a $190,000 tax bill, a rate under 4 percent. Today that bill is 10 times higher.

Today, individuals who earn $8,925 pay tax at a higher rate (10 percent) than people who in 1913 earned the 2013 equivalent of $12 million (7 percent). 

Fifty-three percent of Americans pay the federal income tax. Fewer than one percent did 100 years ago.