Revenue Act of 1921
Encyclopedia
The United States Revenue Act of 1921 (ch. 136, , November 23, 1921) was the first Republican tax reduction following their landslide victory in the 1920 federal elections. New Secretary of the Treasury Andrew Mellon argued that significant tax reduction was necessary in order to spur economic expansion and restore prosperity.

Mellon obtained repeal of the wartime excess profits tax
Excess profits tax
In the United States, an excess profits tax is a tax, some say excise tax, on any profit above a certain amount. A predominantly wartime fiscal instrument, the tax was designed primarily to capture wartime profits that exceeded normal peacetime profits....

. The top marginal rate on individuals fell from 73 to 58 percent by 1922, and preferential treatment for capital gains was introduced at a rate of 12.5 percent. Mellon had hoped for more significant tax reduction.

Tax on Corporations

In 1921 a rate of 10 percent was levied on the net income of corporations and 12.5 percent levied thereafter.

Tax on Individuals

A Normal Tax and a Surtax were levied against the net income of individuals as shown in the following table.
Revenue Act of 1921
Normal Tax and Surtax on Individuals


Net Income Normal Rate Surtax applicable
to 1921
Surtax applicable
to 1922 and thereafter
(dollars) (percent) Surtax Rate
(percent)
Combined Rate
(percent)
Surtax Rate
(percent)
Combined Rate
(percent)
0 4 0 4 0 4
4,000 8 0 8 0 8
5,000 8 1 9 0 8
6,000 8 2 10 1 9
8,000 8 3 11 1 9
10,000 8 4 12 2 10
12,000 8 5 13 3 11
14,000 8 6 14 4 12
16,000 8 7 15 5 13
18,000 8 8 16 6 14
20,000 8 9 17 8 16
22,000 8 10 18 9 17
24,000 8 11 19 10 18
26,000 8 12 20 11 19
28,000 8 13 21 12 20
30,000 8 14 22 13 21
32,000 8 15 23 15 23
34,000 8 16 24 15 23
36,000 8 17 25 16 24
38,000 8 18 26 17 25
40,000 8 19 27 18 26
42,000 8 20 28 19 27
44,000 8 21 29 20 28
46,000 8 22 30 21 29
48,000 8 23 31 22 30
50,000 8 24 32 23 31
52,000 8 25 33 24 32
54,000 8 26 34 25 33
56,000 8 27 35 26 34
58,000 8 28 36 27 35
60,000 8 29 37 28 36
62,000 8 30 38 29 37
64,000 8 31 39 30 38
66,000 8 32 40 31 39
68,000 8 33 41 32 40
70,000 8 34 42 33 41
72,000 8 35 43 34 42
74,000 8 36 44 35 43
76,000 8 37 45 36 44
78,000 8 38 46 37 45
80,000 8 39 47 38 46
82,000 8 40 48 39 47
84,000 8 41 49 40 48
86,000 8 42 50 41 49
88,000 8 43 51 42 50
90,000 8 44 52 43 51
92,000 8 45 53 44 52
94,000 8 46 54 45 53
96,000 8 47 55 46 54
98,000 8 48 56 47 55
100,000 8 52 60 48 56
150,000 8 56 64 49 57
200,000 8 60 68 50 58
300,000 8 63 71
500,000 8 64 72
1,000,000 8 65 73

  • Exemption of $1,000 for single filers and $2,500 for married couples and heads of family. A $400 exemption for each dependent under 18. Married couple exemption is reduced to $2,000 for net income over $5,000.
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