The Revenue Act of 1862 updated the Revenue Act of 1861 with the goal of increasing government revenue, in large part to support the Civil War expenses. It also addressed a major weakness in the Revenue Act of 1861, no enforcement. The acts revenue fell far short of expectations because of the lack of enforcement and with the new act a collection mechanism in the form of the Commissioner of Internal Revenue was created. It also created the first Progressive Tax with different rates based on peoples ability to pay by Income level, later to be struck down as unconstitutional before the passing of the 16th Amendment in 1913. It created 3 tax brackets:
| Income | Tax | 2025 Dollars |
| $0-$600 | 0% | $ 18,998 |
| $600-$10,000 | 3% | $ 316,633 |
| > $10,000 | 5% |
Significance:
- First Progressive Income tax to individuals in United States with passing of Revenue Act of 1862
- Created a Commissioner of Internal Revenue, predecessor of the Internal Revenue Service (IRS)
- Progressive Tax implemented would later be ruled unconstitutional until the passing of the 16th amendment in 1913
