Since the nations founding, the government had survived on a number of different revenue streams, mostly Tariffs, but not taxes on individual incomes. However, the government implemented an income tax to support the Civil War. The Revenue Act of 1861 introduced the first federal income tax, levying a flat 3% tax on incomes exceeding $800 annually ($29,073 in 2025 dollars).
Significance:
- First Income tax to individuals in United States with passing of Revenue Act of 1861
- Issued as a Flat Tax (everyone pays the same rate) with only one Tax Bracket
- The Tax applied to all individuals with Income from all sources included in the tax
- First of many Tax increases to support War time spending
