The Digestible IRS Series
Written by Samuel Sweitzer April 29th, 2021
How Low Can You Go?
As you may have guessed, taxes have fluctuated over the years. The highest marginal tax rate has been a common discussion in politics today, as well as historically. The lowest top marginal rate was when the income tax was first established. The IRS tax rate history (a link to the SOI Tax Stats – Historical Table 23 is found below) shows the top rate was a measly 7% from 1913 to 1915. It did not take long for tax rates to rise, but how low have they been recently? The lowest top tax rate in the last ten years was in 2012 and was 35%. The lowest in the last 30 years was 31% and was in the tax years 1991 and 1992.
How High is High?
Taxes may feel like a burden now, but we are far from the highest marginal tax rate in history. You may be surprised with how much the tax rate has fluctuated. If we go all the way back to 1944 and 1945, we can see that the highest tax rate was 94% during those years. In 1978, when the 401(k) laws were introduced, the rate was 70% if you were in the highest bracket. I encourage you to check out the historical table below and see how taxes fluctuated over time.
Where are Taxes Heading?
No one knows for sure what will happen to the marginal tax rates in the future. There are many other aspects, such as the standard deduction and other itemized deduction amounts that determine your overall tax payment. These are not accurately reflected in the top marginal tax rates. The one known is that unless congress passes new tax guidance, the Tax Cuts and Jobs Act Legislation expires after filing year 2025. The tax cuts for individuals and families were not written to be permanent. If you are worried about tax efficient financial planning, please do not hesitate to reach out.
The Internal Revenue Service. SOI Tax Stats – Historical Table 23. (2020). Retrieved from
Congress. H.R. 13511 – Tax Cuts and Jobs Act. (2017). Retrieved from
Kenneth Sweitzer is a licensed insurance professional. Sam Sweitzer is a financial professional who offers insurance. Kenneth Sweitzer is a licensed insurance professional. Sam Sweitzer is a financial professional who offers insurance services.
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