Tax Reform Act of 1976
Encyclopedia
The Tax Reform Act of 1976 was passed by the United States Congress
in September of 1976, and signed into law by President
Gerald Ford
on October 4, 1976, becoming .
The act increased the percentage standard deduction
to 16% ($2,800 max) and minimum standard deduction to $2,100 (joint returns). The general tax credit (max of $35/capita or 2% of $9,000 income) was temporarily extended and small business tax rates were temporarily lowered through 1977.
The act delayed the decrease in the investment tax credit through 1980, expanded the individual minimum tax, and increased the long term capital gains holding period from 6 months to 1 year.
A unified rate schedule for the estate and gift taxes with a $175,000 exemption was created.
) had established a 10% minimum tax and while it had left long-term capital gains under $50,000 to continue to qualify for the 25 percent alternative capital gains tax rate, it increased the rate on gains over $50,000 to 29.5 percent in 1970, 32.5 percent in 1971, and 35 percent (one-half the 70 percent top tax rate applicable to ordinary income) in 1972 and later years.
This Act increased the minimum tax rate to 15%. The Act also increased the holding period defining long-term capital gains, which receive preferential tax treatment, from six months to one year.
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
in September of 1976, and signed into law by President
President of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....
Gerald Ford
Gerald Ford
Gerald Rudolph "Jerry" Ford, Jr. was the 38th President of the United States, serving from 1974 to 1977, and the 40th Vice President of the United States serving from 1973 to 1974...
on October 4, 1976, becoming .
The act increased the percentage standard deduction
Standard deduction
The standard deduction, as defined under United States tax law, is a dollar amount that non-itemizers may subtract from their income and is based upon filing status. It is available to US citizens and resident aliens who are individuals, married persons, and heads of household and increases every...
to 16% ($2,800 max) and minimum standard deduction to $2,100 (joint returns). The general tax credit (max of $35/capita or 2% of $9,000 income) was temporarily extended and small business tax rates were temporarily lowered through 1977.
The act delayed the decrease in the investment tax credit through 1980, expanded the individual minimum tax, and increased the long term capital gains holding period from 6 months to 1 year.
A unified rate schedule for the estate and gift taxes with a $175,000 exemption was created.
Capital Gains
The previous major tax legislation (Tax Reform Act of 1969Tax Reform Act of 1969
The United States Tax Reform Act of 1969 was a federal tax law signed by president Richard Nixon in 1969. The largest impact of the act was the creation of the Alternative Minimum Tax, which was intended to tax high income earners otherwise exempt from income taxes through various exemptions and...
) had established a 10% minimum tax and while it had left long-term capital gains under $50,000 to continue to qualify for the 25 percent alternative capital gains tax rate, it increased the rate on gains over $50,000 to 29.5 percent in 1970, 32.5 percent in 1971, and 35 percent (one-half the 70 percent top tax rate applicable to ordinary income) in 1972 and later years.
This Act increased the minimum tax rate to 15%. The Act also increased the holding period defining long-term capital gains, which receive preferential tax treatment, from six months to one year.