Which U.S. tax law of 1861 created the nation’s first federal income tax?

The Revenue Act of 1861 created the United States’ first federal income tax. Congress passed it during the Civil War to help finance the Union war effort.

The law imposed a 3 percent tax on annual incomes above $800. It was designed as a temporary measure and reflected the federal government’s urgent need for revenue after hostilities began in 1861.

Congress replaced the arrangement with a more developed income-tax system in the Revenue Act of 1862. That later law introduced graduated rates and helped establish the Bureau of Internal Revenue, the ancestor of today’s Internal Revenue Service.

The 1861 income tax was not the same as the modern constitutional system. The Supreme Court struck down a later federal income tax in Pollock v. Farmers’ Loan & Trust Co. in 1895, and the Sixteenth Amendment eventually authorized an income tax without apportionment among the states.