This period was characterized by massive tax increases and deficits to pay for the immense expenses and resources required for World War II. The Revenue Act of 1940 was a major piece of U.S. tax legislation. The Revenue Act was signed into law by President Franklin D. Roosevelt and it was designed to increase federal revenue in light of growing defense expenditures. The top marginal income tax rate hit 94% in 1944–1945.
Significance:
- Dramatic and massive increase in Tax Revenue and Marginal Tax Rates
- Highest National Debt to GDP ratio to data, dramatically higher than any other period, only rivaled by our current National Debt
- Corporate Marginal Tax Rates increased to 19%, and 33% over $25,000
- The Revenue Act of 1940 base individual Income Rate was 4% with a Surtax added with the top combined Marginal Tax Rate of 79%
- The Top Marginal Tax rates in 1944-1945 hit 94% for Income over $200,000 ($3.6 Million in 2025)
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