The United States War Revenue Act of 1917 greatly increased federal income tax rates while simultaneously lowering exemptions.[1]
The 2% bracket had previously applied to income below $20,000. That amount was lowered to $2,000. The top bracket (on income above $2 million) was raised from 15% to 67%.
The act was applicable to incomes for 1917.
War Income Tax for Individuals
In addition to the Normal Tax and an Additional Tax levied against the net income of individuals in the Revenue Act of 1916 a
"like normal" tax and a "like additional" tax were levied against the net income of individuals as shown in the following table.
Revenue Act of 1917
War Income Tax on Individuals
40 Stat. 300
[2]
|
|
|
Tax Rates from 1916 Act
|
Tax Rates from 1917 Act
|
|
Net Income
(dollars)
|
Normal Rate
(percent)
|
Additional Rate
(percent)
|
Like Normal Rate
(percent)
|
Like Additional Rate
(percent)
|
Combined Rate
(percent)
|
| 0
|
2
|
0
|
2
|
0
|
4
|
| 5,000
|
2
|
0
|
2
|
1
|
5
|
| 7,500
|
2
|
0
|
2
|
2
|
6
|
| 10,000
|
2
|
0
|
2
|
3
|
7
|
| 12,500
|
2
|
0
|
2
|
4
|
8
|
| 15,000
|
2
|
0
|
2
|
5
|
9
|
| 20,000
|
2
|
1
|
2
|
7
|
12
|
| 40,000
|
2
|
2
|
2
|
10
|
16
|
| 60,000
|
2
|
3
|
2
|
14
|
21
|
| 80,000
|
2
|
4
|
2
|
18
|
26
|
| 100,000
|
2
|
5
|
2
|
22
|
31
|
| 150,000
|
2
|
6
|
2
|
25
|
35
|
| 200,000
|
2
|
7
|
2
|
30
|
41
|
| 250,000
|
2
|
8
|
2
|
34
|
46
|
| 300,000
|
2
|
9
|
2
|
37
|
50
|
| 500,000
|
2
|
10
|
2
|
40
|
54
|
| 750,000
|
2
|
10
|
2
|
45
|
59
|
| 1,000,000
|
2
|
11
|
2
|
50
|
65
|
| 1,500,000
|
2
|
12
|
2
|
50
|
66
|
| 2,000,000
|
2
|
13
|
2
|
50
|
67
|
- Exemption of $3,000 for a single filer, $4,000 for a married couple, and $4,000 for a head of household.
Inflation-adjusted numbers
| 1917
|
2023
|
| $2,000
|
$47,564
|
| $20,000
|
$475,636
|
| $2,000,000
|
$47,563,636
|
Report of payments
The War Revenue Act of 1917 required every entity to report certain payments made to another entity. Payments subject to reporting included payments of interest, rent, salaries, wages, premiums, annuities, compensation, remuneration, emoluments, or other fixed or determinable gains, profits, and income. Payments to an entity were required to be reported if the payments totaled at least $800 during the year. The payor was required to report the name and address of the payee and the total amount of payments on Form 1099 and sent to the Internal Revenue Service by March 1 of the year following the payments. The payor was required to include Form 1096, a letter of transmittal and affidavit certifying the accuracy of each Form 1099.[3][4]
Notes
- ^ Blakey, Roy G. (1917). "The War Revenue Act of 1917". The American Economic Review. 7 (4): 791–815. ISSN 0002-8282.
- ^ Facsimile from Statutes at Large
- ^ "Internal Revenue Service". The Guymon Herald (Guymon, Oklahoma). February 17, 1918. p. 1.
- ^ "$578,304 Decrease in W.R.&E. Surplus: Strike, Higher Tax and Increase in Materials and Labor Cost Cut Net Income." The Washington Post. January 20, 1918. p. RE4. "A special blank for use of employers in reporting to collectors of Internal revenue annual salaries paid in 1917 in excess of $800 has been prepared by the bureau of internal revenue throughout the country. The blank is form 1099, and Washington business organizations can procure it by applying at the Treasury. Under the war revenue act of 1917 employers are no longer required to withhold the 2 per cent income tax from salaries, except in the case of non-resident aliens, but must advise the internal revenue collectors of all salaries paid which amount to $800 or more."
