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April 27, 2021

Federal Individual Income Tax: Exemptions and Treatment of Dividends (1913-2021)

Federal Individual Income Tax: Exemptions and Treatment of Dividends (1913-2021)
Income Year   Joint Filer Exemption (a) Single Filer Exemption Exemption Amount per Dependent Treatment of Dividends
1913 $4000 (b) $3,000 $0 Exempt
1914 $4,000 $3,000 $0 Exempt
1915 $4,000 $3,000 $0 Exempt
1916 $4,000 $3,000 $0 Exempt
1917 $2,000 $1,000 $200 Exempt
1918 $2,000 $1,000 $200 Exempt
1919 $2,000 $1,000 $200 Exempt
1920 $2,000 $1,000 $200 Exempt
1921 (c) $2,500 $1,000 $400 Exempt
1922 (c) $2,500 $1,000 $400 Exempt
1923 (c)  $2,500 $1,000 $400 Exempt
1924 (c)  $2,500 $1,000 $400 Exempt
1925 $3,500 $1,500 $400 Exempt
1926 $3,500 $1,500 $400 Exempt
1927 $3,500 $1,500 $400 Exempt
1928 $3,500 $1,500 $400 Exempt
1929 $3,500 $1,500 $400 Exempt
1930 $3,500 $1,500 $400 Exempt
1931 $3,500 $1,500 $400 Exempt
1932 $2,500 $1,000 $400 Exempt
1933 $2,500 $1,000 $400 Exempt
1934 $2,500 $1,000 $400 Exempt
1935 $2,500 $1,000 $400 Exempt
1936 $2,500 $1,000 $400 Fully Taxable
1937 $2,500 $1,000 $400 Fully Taxable
1938 $2,500 $1,000 $400 Fully Taxable
1939 $2,500 $1,000 $400 Fully Taxable
1940 $2,000 $800 $400 Exempt
1941 $1,500 $750 $400 Exempt
1942 $1,200 $500 $350 Exempt
1943 $1,200 $500 $350 Exempt
1944 $1000 (d) $500 $500 (d) Exempt
1945 $1,000 $500 $500 Exempt
1946 $1,000 $500 $500 Exempt
1947 $1,000 $500 $500 Exempt
1948 $1,200 $600 $600 Exempt
1949 $1,200 $600 $600 Exempt
1950 $1,200 $600 $600 Exempt
1951 $1,200 $600 $600 Exempt
1952 $1,200 $600 $600 Exempt
1953 $1,200 $600 $600 Exempt
1954 $1,200 $600 $600 First $50 exempt
1955 $1,200 $600 $600 First $50 exempt
1956 $1,200 $600 $600 First $50 exempt
1957 $1,200 $600 $600 First $50 exempt
1958 $1,200 $600 $600 First $50 exempt
1959 $1,200 $600 $600 First $50 exempt
1960 $1,200 $600 $600 First $50 exempt
1961 $1,200 $600 $600 First $50 exempt
1962 $1,200 $600 $600 First $50 exempt
1963 $1,200 $600 $600 First $50 exempt
1964 $1,200 $600 $600 First $100 exempt
1965 $1,200 $600 $600 First $100 exempt
1966 $1,200 $600 $600 First $100 exempt
1967 $1,200 $600 $600 First $100 exempt
1968 $1,200 $600 $600 First $100 exempt
1969 $1,200 $600 $600 First $100 exempt
1970 $1,250 $625 $625 First $100 exempt
1971 $1350 (e)  $675 (e) $675 (e) First $100 exempt
1972 $1,500 $750 $750 First $100 exempt
1973 $1,500 $750 $750 First $100 exempt
1974 $1,500 $750 $750 First $100 exempt
1975 $1,500 $750 $750 First $100 exempt
1976 $1,500 $750 $750 First $100 exempt
1977 $1,500 $750 $750 First $100 exempt
1978 $1,500 $750 $750 First $100 exempt
1979 $2,000 $1,000 $1,000 First $100 exempt
1980 $2,000 $1,000 $1,000 First $100 exempt
1981 $2,000 $1,000 $1,000 (f)
1982 $2,000 $1,000 $1,000 (f)
1983 $2,000 $1,000 $1,000 (f)
1984 $2,000 $1,000 $1,000 (f)
1985 $2080 (g) $1040 (g) $1040 (g) Fully Taxable
1986 $2160 (g) $1080 (g) $1080 (g) Fully Taxable
1987 $3,800 $1,900 $1,900 Fully Taxable
1988 (h) $3,900 $1,950 $1,950 Fully Taxable
1989 $4000 (g) $2000 (g) $2000 (g) Fully Taxable
1990 $4,100 $2,050 $2,050 Fully Taxable
1991 $4,300 $2,150 $2,150 Fully Taxable
1992 $4,600 $2,300 $2,300 Fully Taxable
1993 $4,700 $2,350 $2,350 Fully Taxable
1994 $4,900 $2,450 $2,450 Fully Taxable
1995 $5,000 $2,500 $2,500 Fully Taxable
1996 $5,100 $2,550 $2,550 Fully Taxable
1997 $5,300 $2,650 $2,650 Fully Taxable
1998 $5,400 $2,700 $2,700 Fully Taxable
1999 $5,500 $2,750 $2,750 Fully Taxable
2000 $5,600 $2,800 $2,800 Fully Taxable
2001 $5,700 $2,850 $2,850 Fully Taxable
2002 $6,000 $3,000 $3,000 Fully Taxable
2003 $6,100 $3,050 $3,050 Top Rate 16.05 percent (i)
2004 $6,200 $3,100 $3,100 Top Rate 16.05 percent
2005 $6,200 $3,200 $3,200 Top Rate 16.05 percent
2006 $6,600 $3,300 $3,300 Top Rate 16.05 percent
2007 $6,800 $3,400 $3,400 Top Rate 16.05 percent
2008 $7,000 $3,500 $3,500 Top Rate 16.05 percent
2009 $7,300 $3,650 $3,650 Top Rate 16.05 percent
2010 $7,300 $3,650 $3,650 Top Rate 15 percent
2011 $7,400 $3,700 $3,700 Top Rate 15 percent
2012 $7,600 $3,800 $3,800 Top Rate 15 percent
2013 $7,800 $3,900 $3,900 Top Rate 25.1 percent (j)
2014 $7,900 $3,950 $3,950 Top Rate 25.1 percent 
2015 $8,000 $4,000 $4,000 Top Rate 25.1 percent 
2016 $8,100 $4,050 $4,050 Top Rate 25.1 percent 
2017 $8,100 $4,050 $4,050 Top Rate 25.1 percent 
2018 $0  (k) $0  (k) $0  (k) Top Rate 23.8 percent (k)
2019 $0 $0 $0 Top Rate 23.8 percent
2020 $0 $0 $0 Top Rate 23.8 percent
2021 $0 $0 $0 Top Rate 23.8 percent

(a) For the years 1916-1943, the personal exemption allowed to joint filers was also allowed for heads of families. For 1948 and subsequent years, an additional exemption is granted to persons over 65 and to the blind.

(b) Tariff Act of October 3, 1913. Tax effective on income for last 10 months in 1913.

(c) For net incomes in excess of $5,000, personal exemption was $2,000

(d) $500 was the normal exemption per taxpayer in 1944, separate from an exemption on the income surtax

(e) In 1971, the increased personal and dependency exemptons were effective one-half of the year.

(f) For 1981-1982, the first $200 of combined dividend and interest income ($400 joint) was exempt. For income years 1981-1986, up to $750 ($1,500 for joint returns) of reinvested dividends of public utilities was exempt.

(g) Effective in 1985 and 1986, and after 1989, personal exemption allownces were adjusted by changes in the Consumer Price Index (CPI)

(h) Beginning in 1988, the personal exemption was phased-out for high income taxpayers

(i) Includes the 15 percent top marginal dividends tax rate plus the 3 percent Pease limitation on itemized deductions applied against the top marginal tax rate. The Pease limitation was phased out between 2006 and 2010, and was levied at 2 percent in 2006 and 2007 and 1 percent in 2008 and 2009. The Pease limitation was suspended for 2010, 2011, and 2012.

(j) Beginning in 2013, dividends were subject to the 3.8 percent net investment income tax (NIIT) for those with modified adjustment gross income above $200,000 filing single, $250,000 filing joint. The 3 percent Pease limitation on itemized deductions was reinstated in 2013 through 2017.

(k) The Tax Cuts and Jobs Act (TCJA) of 2017 made the personal exemption $0 and repealed the Pease limitation for tax years 2018 to 2025.

Sources: Internal Revenue Service, Tax Foundation calculations
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Itemized deductions allow individuals to subtract designated expenses from their taxable income and can be claimed in lieu of the standard deduction. Itemized deductions include those for state and local taxes, charitable contributions, and mortgage interest. An estimated 13.7 percent of filers itemized in 2019, most being high-income taxpayers. 

The Tax Cuts and Jobs Act in 2017 overhauled the federal tax code by reforming individual and business taxes. It was pro-growth reform, significantly lowering marginal tax rates and cost of capital. We estimated it reduced federal revenue by $1.47 trillion over 10 years before accounting for economic growth.

An individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S.

The marginal tax rate is the amount of additional tax paid for every additional dollar earned as income. The average tax rate is the total tax paid divided by total income earned. A 10 percent marginal tax rate means that 10 cents of every next dollar earned would be taken as tax.