26 U.S.C. § 1: Tax imposed

§ 1.1-1 Income tax on individuals.§ 1.1-2 Limitation on tax.§ 1.1-3 Change in rates applicable to taxable year.

Amended 1964, 2000

2000 Pub. L. 106-554 Subsec.(h)(8). Pub. L. 106–554 substituted “means the excess of—” and subpars. (A) and (B) for “means an amount equal to the gain excluded from gross income under section 1202(a).”
1964 Pub. L. 88-272 Pub. L. 88–272 amended section generally by splitting the former first bracket which started at $2,000 into four new brackets, the 14 percent bracket representing a 30 percent reduction, the 15 percent bracket a 25 percent cut, and the 16 percent bracket a 20 percent cut, and reducing all other brackets by cuts averaging about 20 percent and effectuated these cuts in two steps, one in 1964, and one in 1965.

Cases: Druker v. Commissioner, 697 F.2d 46 (2d Cir. 1982)

Final rules 2

(a) Married individuals filing joint returns and surviving spouses There is hereby imposed on the taxable income of—

Amended 1969, 1977, 1978, 1981, 1986, 1990, 1993

1993 Pub. L. 103-66 Pub. L. 103–66, §§ 13201(a), 13202(a), amended subsecs. (a) to (e) generally, substituting five-tiered tax tables for all categories applicable to tax years after December 31, 1992, for prior three-tiered tax tables.
1990 Pub. L. 101-508 Pub. L. 101–508, § 11101(a), amended subsecs. (a) to (e) generally, substituting three-tiered tax tables for all categories applicable to tax years after Dec. 31, 1990, for prior two-tiered tax tables.
1986 Pub. L. 99-514 Pub. L. 99–514, § 101(a), in amending subsecs. (a) to (e) generally, substituted a general tax table for tax tables (1), (2), and (3) in each subsec. applicable to taxable years beginning in 1982, 1983, and after 1983, respectively.
1981 Pub. L. 97-34 Pub. L. 97–34, § 101(a), generally revised tax tables downward providing for cumulative across-the-board reductions of 23 percent on a three phase schedule under which different new rates were set for taxable years beginning in 1982, for taxable years beginning in 1983, and for taxable years beginning after 1983.
1978 Pub. L. 95-600 Pub. L. 95–600 generally made a downward revision of tax table for married individuals filing joint returns and surviving spouses resulting in a table under which, among other changes, a bottom bracket imposing no tax on taxable income of $3,400 or less was substituted for a bottom bracket imposing no tax on taxable income of $3,200 or less.
1977 Pub. L. 95-30 Pub. L. 95–30 generally made a downward revision of tax table for married individuals filing joint returns and surviving spouses resulting in a table under which, among other changes, a bottom bracket imposing no tax on taxable income of $3,200 or less was substituted for a bottom bracket under which a tax of 14% had been imposed on a taxable income of $1,000 or less.
1969 Pub. L. 91-172 Pub. L. 91–172 substituted a table of rates of tax for married individuals filing joint returns and surviving spouses for the tables of rates of tax on individuals. For rates of taxes on unmarried individuals and married persons filing separate returns, see subsecs. (c) and (d) of this section.

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(1) every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and

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(2) every surviving spouse (as defined in section 2(a)),

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a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $36,90015% of taxable income. Over $36,900 but not over $89,150$5,535, plus 28% of the excess over $36,900. Over $89,150 but not over $140,000$20,165, plus 31% of the excess over $89,150. Over $140,000 but not over $250,000$35,928.50, plus 36% of the excess over $140,000. Over $250,000$75,528.50, plus 39.6% of the excess over $250,000.

(b) Heads of households There is hereby imposed on the taxable income of every head of a household (as defined in section 2(b)) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $29,60015% of taxable income. Over $29,600 but not over $76,400$4,440, plus 28% of the excess over $29,600. Over $76,400 but not over $127,500$17,544, plus 31% of the excess over $76,400. Over $127,500 but not over $250,000$33,385, plus 36% of the excess over $127,500. Over $250,000$77,485, plus 39.6% of the excess over $250,000.

Amended 1969, 1977, 1978, 1981, 1986, 1990, 1993

1993 Pub. L. 103-66 Pub. L. 103–66, §§ 13201(a), 13202(a), amended subsecs. (a) to (e) generally, substituting five-tiered tax tables for all categories applicable to tax years after December 31, 1992, for prior three-tiered tax tables.
1990 Pub. L. 101-508 Pub. L. 101–508, § 11101(a), amended subsecs. (a) to (e) generally, substituting three-tiered tax tables for all categories applicable to tax years after Dec. 31, 1990, for prior two-tiered tax tables.
1986 Pub. L. 99-514 Pub. L. 99–514, § 101(a), in amending subsecs. (a) to (e) generally, substituted a general tax table for tax tables (1), (2), and (3) in each subsec. applicable to taxable years beginning in 1982, 1983, and after 1983, respectively.
1981 Pub. L. 97-34 Pub. L. 97–34, § 101(a), generally revised tax tables downward providing for cumulative across-the-board reductions of 23 percent on a three phase schedule under which different new rates were set for taxable years beginning in 1982, for taxable years beginning in 1983, and for taxable years beginning after 1983.
1978 Pub. L. 95-600 Pub. L. 95–600 generally made a downward revision of tax table for heads of household resulting in a table under which, among other changes, a bottom bracket imposing no tax on taxable income of $2,300 or less was substituted for a bottom bracket imposing no tax on taxable income of $2,200 or less.
1977 Pub. L. 95-30 Pub. L. 95–30 generally made a downward revision of tax table for heads of households resulting in a table under which, among other changes, a bottom bracket imposing no tax on taxable income of $2,200 or less was substituted for a bottom bracket under which a tax of 14% had been imposed on a taxable income of $1,000 or less.
1969 Pub. L. 91-172 Pub. L. 91–172 generally revised rates of tax of heads of household downwards and struck out provisions defining head of household, determination of status, and limitations. For definition of head of household, determination of status, and limitations, see section 2(b) of this title.

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(c) Unmarried individuals (other than surviving spouses and heads of households) There is hereby imposed on the taxable income of every individual (other than a surviving spouse as defined in section 2(a) or the head of a household as defined in section 2(b)) who is not a married individual (as defined in section 7703) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $22,10015% of taxable income. Over $22,100 but not over $53,500$3,315, plus 28% of the excess over $22,100. Over $53,500 but not over $115,000$12,107, plus 31% of the excess over $53,500. Over $115,000 but not over $250,000$31,172, plus 36% of the excess over $115,000. Over $250,000$79,772, plus 39.6% of the excess over $250,000.

Amended 1969, 1977, 1978, 1981, 1986, 1990, 1993

1993 Pub. L. 103-66 Pub. L. 103–66, §§ 13201(a), 13202(a), amended subsecs. (a) to (e) generally, substituting five-tiered tax tables for all categories applicable to tax years after December 31, 1992, for prior three-tiered tax tables.
1990 Pub. L. 101-508 Pub. L. 101–508, § 11101(a), amended subsecs. (a) to (e) generally, substituting three-tiered tax tables for all categories applicable to tax years after Dec. 31, 1990, for prior two-tiered tax tables.
1986 Pub. L. 99-514 Pub. L. 99–514, § 101(a), in amending subsecs. (a) to (e) generally, substituted a general tax table for tax tables (1), (2), and (3) in each subsec. applicable to taxable years beginning in 1982, 1983, and after 1983, respectively.
1981 Pub. L. 97-34 Pub. L. 97–34, § 101(a), generally revised tax tables downward providing for cumulative across-the-board reductions of 23 percent on a three phase schedule under which different new rates were set for taxable years beginning in 1982, for taxable years beginning in 1983, and for taxable years beginning after 1983.
1978 Pub. L. 95-600 Pub. L. 95–600 generally made a downward revision of tax table for unmarried individuals other than surviving spouses and heads of households resulting in a table under which, among other changes, a bottom bracket imposing no tax on taxable income of $2,300 or less was substituted for a bottom bracket imposing no tax on taxable income of $2,200 or less.
1977 Pub. L. 95-30 Pub. L. 95–30 generally made a downward revision of tax table for unmarried individuals other than surviving spouses and heads of households resulting in a table under which, among other changes, a bottom bracket imposing no tax on taxable income of $2,200 or less was substituted for a bottom bracket under which a tax of 14% had been imposed on a taxable income of $500 or less.
1969 Pub. L. 91-172 Pub. L. 91–172 substituted rates of tax on unmarried individuals (other than surviving spouses and heads of household) for special rules explaining the rates of tax imposed under former subsecs. (a) and (b)(1) and prescribing a maximum limit of 87 percent of the taxable year.

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(d) Married individuals filing separate returns There is hereby imposed on the taxable income of every married individual (as defined in section 7703) who does not make a single return jointly with his spouse under section 6013, a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $18,45015% of taxable income. Over $18,450 but not over $44,575$2,767.50, plus 28% of the excess over $18,450. Over $44,575 but not over $70,000$10,082.50, plus 31% of the excess over $44,575. Over $70,000 but not over $125,000$17,964.25, plus 36% of the excess over $70,000. Over $125,000$37,764.25, plus 39.6% of the excess over $125,000.

Amended 1966, 1969, 1977, 1978, 1981, 1982, 1986, 1990, 1993

1993 Pub. L. 103-66 Pub. L. 103–66, §§ 13201(a), 13202(a), amended subsecs. (a) to (e) generally, substituting five-tiered tax tables for all categories applicable to tax years after December 31, 1992, for prior three-tiered tax tables.
1990 Pub. L. 101-508 Pub. L. 101–508, § 11101(a), amended subsecs. (a) to (e) generally, substituting three-tiered tax tables for all categories applicable to tax years after Dec. 31, 1990, for prior two-tiered tax tables.
1986 Pub. L. 99-514 Pub. L. 99–514, § 101(a), in amending subsecs. (a) to (e) generally, substituted a general tax table for tax tables (1), (2), and (3) in each subsec. applicable to taxable years beginning in 1982, 1983, and after 1983, respectively.
1982 Pub. L. 97-448 Pub. L. 97–448, § 101(a)(3), set out as a note below, provided for amendment of the tables applying to married individuals filing separately or to estates and trusts so as to correct any figure differing by not more than 50 cents from the correct amount under the formula used in constructing such table. Corrections to the tables in subsecs. (d) and (e) appeared in Announcement 83–50 contained in Internal Revenue Bulletin No. 1983–12 of Mar. 21, 1983.
1981 Pub. L. 97-34 Pub. L. 97–34, § 101(a), generally revised tax tables downward providing for cumulative across-the-board reductions of 23 percent on a three phase schedule under which different new rates were set for taxable years beginning in 1982, for taxable years beginning in 1983, and for taxable years beginning after 1983.
1978 Pub. L. 95-600 Pub. L. 95–600 generally made a downward revision of tax tables for married individuals filing separate returns resulting in a table under which, among other changes, a bottom bracket imposing no tax on taxable income of $1,700 or less was substituted for a bottom bracket imposing no tax on taxable income of $1,600 or less.
1977 Pub. L. 95-30 Pub. L. 95–30 generally made a downward revision of tax table for married individuals filing separate returns resulting in a table under which, among other changes, a bottom bracket imposing no tax on taxable income of $1,600 or less was substituted for a bottom bracket under which a tax of 14% had been imposed on a taxable income of $500 or less. Provisions making table applicable to estates and trusts were struck out. See subsec. (e).
1969 Pub. L. 91-172 Pub. L. 91–172 substituted a table of rates of tax for married individuals filing separate returns for provision prescribing the applicability of the rates to non-resident aliens. For applicability of rates of tax to non-resident aliens, see section 2(d) of this title.
1966 Pub. L. 89-809 Pub. L. 89–809 added subsec. (d) and redesignated former subsec. (d) as (e).

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(e) Estates and trusts There is hereby imposed on the taxable income of—

Amended 1966, 1969, 1977, 1978, 1981, 1982, 1986, 1990, 1993

1993 Pub. L. 103-66 Pub. L. 103–66, §§ 13201(a), 13202(a), amended subsecs. (a) to (e) generally, substituting five-tiered tax tables for all categories applicable to tax years after December 31, 1992, for prior three-tiered tax tables.
1990 Pub. L. 101-508 Pub. L. 101–508, § 11101(a), amended subsecs. (a) to (e) generally, substituting three-tiered tax tables for all categories applicable to tax years after Dec. 31, 1990, for prior two-tiered tax tables.
1986 Pub. L. 99-514 Pub. L. 99–514, § 101(a), in amending subsecs. (a) to (e) generally, substituted a general tax table for tax tables (1), (2), and (3) in each subsec. applicable to taxable years beginning in 1982, 1983, and after 1983, respectively.
1982 Pub. L. 97-448 Pub. L. 97–448, § 101(a)(3), set out as a note below, provided for amendment of the tables applying to married individuals filing separately or to estates and trusts so as to correct any figure differing by not more than 50 cents from the correct amount under the formula used in constructing such table. Corrections to the tables in subsecs. (d) and (e) appeared in Announcement 83–50 contained in Internal Revenue Bulletin No. 1983–12 of Mar. 21, 1983.
1981 Pub. L. 97-34 Pub. L. 97–34, § 101(a), generally revised tax tables downward providing for cumulative across-the-board reductions of 23 percent on a three phase schedule under which different new rates were set for taxable years beginning in 1982, for taxable years beginning in 1983, and for taxable years beginning after 1983.
1978 Pub. L. 95-600 Pub. L. 95–600 generally made a downward revision of tax tables for estates and trusts resulting in a table under which, among other changes, a bottom bracket under which a tax of 14% is imposed on taxable income of $1,050 for a bottom bracket under which a tax of 14% was imposed on taxable income of $500 or less.
1977 Pub. L. 95-30 Pub. L. 95–30 added subsec. (e) consisting of table formerly contained in subsec. (d) but without any downward revision and limited so as to apply only to estates and trusts.
1969 Pub. L. 91-172 Pub. L. 91–172 struck out cross reference to section 63. See section 2(e) of this title.
1966 Pub. L. 89-809 Pub. L. 89–809 added subsec. (d) and redesignated former subsec. (d) as (e).

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(1) every estate, and

(2) every trust,

taxable under this subsection a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $1,50015% of taxable income. Over $1,500 but not over $3,500$225, plus 28% of the excess over $1,500. Over $3,500 but not over $5,500$785, plus 31% of the excess over $3,500. Over $5,500 but not over $7,500$1,405, plus 36% of the excess over $5,500. Over $7,500$2,125, plus 39.6% of the excess over $7,500.

(f) Phaseout of marriage penalty in 15-percent bracket; adjustments in tax tables so that inflation will not result in tax increases

Amended 1981, 1986, 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 302(b)(2), substituted “Phaseout of marriage penalty in 15-percent bracket; adjustments” for “Adjustments” in heading.
1986 Pub. L. 99-514 Pub. L. 99–514, § 101(a), in amending subsec. (f) generally, in par. (1) substituted “1988,” for “1984” and struck out “paragraph (3) of” before “subsections”, in par. (2) struck out “paragraph (3) of” before “subsection” in introductory provisions, substituted subpars. (A) to (C) for former subpars. (A) to (C) which read as follows:
“(A) by increasing—
“(i) the maximum dollar amount on which no tax is imposed under such table, and
“(ii) the minimum and maximum dollar amounts for each rate bracket for which a tax is imposed under such table,
by the cost-of-living adjustment for such calendar year,
“(B) by not changing the rate applicable to any rate bracket as adjusted under subparagraph (A)(ii), and
“(C) by adjusting the amounts setting forth the tax to the extent necessary to reflect the adjustments in the rate brackets.”,
and struck out concluding provisions which read as follows: “If any increase determined under subparagraph (A) is not a multiple of $10, such increase shall be rounded to the nearest multiple of $10 (or if such increase is a multiple of $5, such increase shall be increased to the next highest multiple of $10).”, in par. (3)(B) substituted “1987” for “1983”, in par. (4) substituted “August 31” for “September 30”, in par. (5) inserted requirement that the Consumer Price Index most consistent with such Index for calendar year 1986 be used, and added par. (6).
1981 Pub. L. 97-34 Pub. L. 97–34, § 104(a), added subsec. (f).

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(1) In general Not later than December 15 of 1993, and each subsequent calendar year, the Secretary shall prescribe tables which shall apply in lieu of the tables contained in subsections (a), (b), (c), (d), and (e) with respect to taxable years beginning in the succeeding calendar year.

Amended 1990, 1993

1993 Pub. L. 103-66 Pub. L. 103–66, § 13201(b)(3)(A)(i), substituted “1993” for “1990”.
1990 Pub. L. 101-508 Pub. L. 101–508, § 11101(d)(1)(A)(i), substituted “1990” for “1988”.

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(2) Method of prescribing tables The table which under paragraph (1) is to apply in lieu of the table contained in subsection (a), (b), (c), (d), or (e), as the case may be, with respect to taxable years beginning in any calendar year shall be prescribed—

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(A) except as provided in paragraph (8), by increasing the minimum and maximum dollar amounts for each bracket for which a tax is imposed under such table by the cost-of-living adjustment for such calendar year, determined—

Amended 2001, 2017

2017 Pub. L. 115-97 Pub. L. 115–97, § 11002(c)(1), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: “except as provided in paragraph (8), by increasing the minimum and maximum dollar amounts for each rate bracket for which a tax is imposed under such table by the cost-of-living adjustment for such calendar year,”.
2001 Pub. L. 107-16 Pub. L. 107–16, § 302(b)(1), inserted “except as provided in paragraph (8),” before “by increasing”.

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(i) except as provided in clause (ii), by substituting “1992” for “2016” in paragraph (3)(A)(ii), and

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(ii) in the case of adjustments to the dollar amounts at which the 36 percent rate bracket begins or at which the 39.6 percent rate bracket begins, by substituting “1993” for “2016” in paragraph (3)(A)(ii),

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(B) by not changing the rate applicable to any rate bracket as adjusted under subparagraph (A), and

(C) by adjusting the amounts setting forth the tax to the extent necessary to reflect the adjustments in the rate brackets.

(3) Cost-of-living adjustment For purposes of this subsection—

Amended 2017

2017 Pub. L. 115-97 Pub. L. 115–97, § 11002(a), added par. (3) and struck out former par. (3). Prior to amendment, text read as follows: “For purposes of paragraph (2), the cost-of-living adjustment for any calendar year is the percentage (if any) by which—
“(A) the CPI for the preceding calendar year, exceeds
“(B) the CPI for the calendar year 1992.”

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(A) In general The cost-of-living adjustment for any calendar year is the percentage (if any) by which—

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(i) the C-CPI-U for the preceding calendar year, exceeds

(ii) the CPI for calendar year 2016, multiplied by the amount determined under subparagraph (B).

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(B) Amount determined The amount determined under this clause is the amount obtained by dividing—

Amended 1990, 1993

1993 Pub. L. 103-66 Pub. L. 103–66, § 13201(b)(3)(A)(ii), substituted “1992” for “1989”.
1990 Pub. L. 101-508 Pub. L. 101–508, § 11101(d)(1)(A)(ii), substituted “1989” for “1987”.

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(i) the C-CPI-U for calendar year 2016, by

(ii) the CPI for calendar year 2016.

(C) Special rule for adjustments with a base year after 2016 For purposes of any provision of this title which provides for the substitution of a year after 2016 for “2016” in subparagraph (A)(ii), subparagraph (A) shall be applied by substituting “the C-CPI-U for calendar year 2016” for “the CPI for calendar year 2016” and all that follows in clause (ii) thereof.

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(4) CPI for any calendar year For purposes of paragraph (3), the CPI for any calendar year is the average of the Consumer Price Index as of the close of the 12-month period ending on August 31 of such calendar year.

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(5) Consumer Price Index For purposes of paragraph (4), the term “Consumer Price Index” means the last Consumer Price Index for all-urban consumers published by the Department of Labor. For purposes of the preceding sentence, the revision of the Consumer Price Index which is most consistent with the Consumer Price Index for calendar year 1986 shall be used.

(6) C-CPI-U For purposes of this subsection—

Amended 2017

2017 Pub. L. 115-97 Pub. L. 115–97, § 11002(b), added par. (6), redesignated former par. (6) as (7), and struck out former par. (7). Prior to amendment, text of par. (7) read as follows: “In prescribing tables under paragraph (1) which apply to taxable years beginning in a calendar year after 1994, the cost-of-living adjustment used in making adjustments to the dollar amounts at which the 36 percent rate bracket begins or at which the 39.6 percent rate bracket begins shall be determined under paragraph (3) by substituting ‘1993’ for ‘1992’.”

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(A) In general The term “C-CPI-U” means the Chained Consumer Price Index for All Urban Consumers (as published by the Bureau of Labor Statistics of the Department of Labor). The values of the Chained Consumer Price Index for All Urban Consumers taken into account for purposes of determining the cost-of-living adjustment for any calendar year under this subsection shall be the latest values so published as of the date on which such Bureau publishes the initial value of the Chained Consumer Price Index for All Urban Consumers for the month of August for the preceding calendar year.

Amended 1990

1990 Pub. L. 101-508 Pub. L. 101–508, § 11104(b)(1), substituted “section 151(d)(4)” for “section 151(d)(3)”.
1990 Pub. L. 101-508 Pub. L. 101–508, § 11103(c), inserted reference to section 68(b)(2).
1990 Pub. L. 101-508 Pub. L. 101–508, § 11101(b)(2), struck out “subsection (g)(4),” after “paragraph (2)(A),”.

(B) Determination for calendar year The C-CPI-U for any calendar year is the average of the C-CPI-U as of the close of the 12-month period ending on August 31 of such calendar year.

Amended 1989, 1990, 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 301(c)(1), substituted “(other than with respect to sections 63(c)(4) and 151(d)(4)(A)) shall be applied” for “(other than with respect to subsection (c)(4) of section 63 (as it applies to subsections (c)(5)(A) and (f) of such section) and section 151(d)(4)(A)) shall be applied”.
1990 Pub. L. 101-508 Pub. L. 101–508, § 11104(b)(2), substituted “section 151(d)(4)(A)” for “section 151(d)(3)”.
1989 Pub. L. 101-239 Pub. L. 101–239, § 7831(a), substituted “subsection (c)(4) of section 63 (as it applies to subsections (c)(5)(A) and (f) of such section) and section 151(d)(3)” for “section 63(c)(4)”.

(7) Rounding

Amended 1993, 2014, 2017

2017 Pub. L. 115-97 Pub. L. 115–97, § 11002(b), added par. (6), redesignated former par. (6) as (7), and struck out former par. (7). Prior to amendment, text of par. (7) read as follows: “In prescribing tables under paragraph (1) which apply to taxable years beginning in a calendar year after 1994, the cost-of-living adjustment used in making adjustments to the dollar amounts at which the 36 percent rate bracket begins or at which the 39.6 percent rate bracket begins shall be determined under paragraph (3) by substituting ‘1993’ for ‘1992’.”
2014 Pub. L. 113-295 Pub. L. 113–295 amended par. (7) generally. Prior to amendment, text read as follows:
2014 “(A) Calendar year 1994.—In prescribing the tables under paragraph (1) which apply with respect to taxable years beginning in calendar year 1994, the Secretary shall make no adjustment to the dollar amounts at which the 36 percent rate bracket begins or at which the 39.6 percent rate begins under any table contained in subsection (a), (b), (c), (d), or (e).
2014 “(B) Later calendar years.—In prescribing tables under paragraph (1) which apply with respect to taxable years beginning in a calendar year after 1994, the cost-of-living adjustment used in making adjustments to the dollar amounts referred to in subparagraph (A) shall be determined under paragraph (3) by substituting ‘1993’ for ‘1992’.”
1993 Pub. L. 103-66 Pub. L. 103–66, § 13201(b)(3)(B), added par. (7).

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(A) In general If any increase determined under paragraph (2)(A), section 63(c)(4), section 68(b)(2) [OLRC note: See References in Text note below.] or section 151(d)(4) is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50.

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(B) Table for married individuals filing separately In the case of a married individual filing a separate return, subparagraph (A) (other than with respect to sections 63(c)(4) and 151(d)(4)(A)) shall be applied by substituting “$25” for “$50” each place it appears.

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(8) Elimination of marriage penalty in 15-percent bracket With respect to taxable years beginning after December 31, 2003, in prescribing the tables under paragraph (1)—

Amended 2001, 2004

2004 Pub. L. 108-311 Pub. L. 108–311, § 101(c), amended par. (8) generally, substituting provisions relating to elimination of marriage penalty in 15-percent bracket for provisions relating to phaseout of marriage penalty in 15-percent bracket.
2001 Pub. L. 107-16 Pub. L. 107–16, § 302(a), added par. (8).

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(A) the maximum taxable income in the 15-percent rate bracket in the table contained in subsection (a) (and the minimum taxable income in the next higher taxable income bracket in such table) shall be 200 percent of the maximum taxable income in the 15-percent rate bracket in the table contained in subsection (c) (after any other adjustment under this subsection), and

Amended 2003

2003 Pub. L. 108-27 Pub. L. 108–27, § 102(b)(1), substituted “2002” for “2004”.

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(B) the comparable taxable income amounts in the table contained in subsection (d) shall be ½ of the amounts determined under subparagraph (A).

Amended 2003

2003 Pub. L. 108-27 Pub. L. 108–27, § 102(a), inserted table item relating to years 2003 and 2004.

(g) Certain unearned income of children taxed as if parent’s income

Amended 1986, 1990, 2007

2007 Pub. L. 110-28 Pub. L. 110–28, § 8241(b), struck out “minor” before “children” in heading.
1990 Pub. L. 101-508 Pub. L. 101–508, § 11101(d)(2), redesignated subsec. (i) as (g).
1990 Pub. L. 101-508 Pub. L. 101–508, § 11101(b)(1), struck out subsec. (g) which provided for phaseout of 15-percent rate and personal exemptions.
1986 Pub. L. 99-514 Pub. L. 99–514, § 101(a), in amending section generally, added subsecs. (g) and (h).

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(1) In general In the case of any child to whom this subsection applies, the tax imposed by this section shall be equal to the greater of—

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(A) the tax imposed by this section without regard to this subsection, or

(B) the sum of—

(i) the tax which would be imposed by this section if the taxable income of such child for the taxable year were reduced by the net unearned income of such child, plus

(ii) such child’s share of the allocable parental tax.

(2) Child to whom subsection applies This subsection shall apply to any child for any taxable year if—

Amended 1988

1988 Pub. L. 100-647 Pub. L. 100–647, § 1001(a)(3), inserted provision relating to application of subpar. (B) at end of last sentence.

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(A) such child—

“to any child” Enclosing § 1(g)(2)

Textual readingANY OF= child meets age requirement

(i) has not attained age 18 before the close of the taxable year, or

(ii)

“to any child” Enclosing § 1(g)(2)

Textual readingALL OF= Child meets clause (ii)

(I) has attained age 18 before the close of the taxable year and meets the age requirements of section 152(c)(3) (determined without regard to subparagraph (B) thereof), and

(II) whose earned income (as defined in section 911(d)(2)) for such taxable year does not exceed one-half of the amount of the individual’s support (within the meaning of section 152(c)(1)(D) after the application of section 152(f)(5) (without regard to subparagraph (A) thereof)) for such taxable year,

Amended 2006, 2007

2007 Pub. L. 110-28 Pub. L. 110–28, § 8241(a), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: “such child has not attained age 18 before the close of the taxable year,”.
2006 Pub. L. 109-222 Pub. L. 109–222, § 510(a), substituted “age 18” for “age 14”.

(B) either parent of such child is alive at the close of the taxable year, and

Amended 2006

2006 Pub. L. 109-222 Pub. L. 109–222, § 510(c), added subpar. (C).

(3) Allocable parental tax For purposes of this subsection—

Amended 1998

1998 Pub. L. 105-206 Pub. L. 105–206, § 6007(f)(1), redesignated subpar. (D) as (C) and struck out heading and text of former subpar. (C). Text read as follows: “If tax is imposed under section 644(a)(1) with respect to the sale or exchange of any property of which the parent was the transferor, for purposes of applying subparagraph (A) to the taxable year of the parent in which such sale or exchange occurs—
“(i) taxable income of the parent shall be increased by the amount treated as included in gross income under section 644(a)(2)(A)(i), and
“(ii) the amount described in subparagraph (A)(ii) shall be increased by the amount of the excess referred to in section 644(a)(2)(A).”

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(A) In general The term “allocable parental tax” means the excess of—

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(i) the tax which would be imposed by this section on the parent’s taxable income if such income included the net unearned income of all children of the parent to whom this subsection applies, over

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(ii) the tax imposed by this section on the parent without regard to this subsection.

For purposes of clause (i), net unearned income of all children of the parent shall not be taken into account in computing any exclusion, deduction, or credit of the parent.

(B) Child’s share A child’s share of any allocable parental tax of a parent shall be equal to an amount which bears the same ratio to the total allocable parental tax as the child’s net unearned income bears to the aggregate net unearned income of all children of such parent to whom this subsection applies.

(C) Special rule where parent has different taxable year Except as provided in regulations, if the parent does not have the same taxable year as the child, the allocable parental tax shall be determined on the basis of the taxable year of the parent ending in the child’s taxable year.

Amended 1998

1998 Pub. L. 105-206 Pub. L. 105–206, § 6007(f)(1), redesignated subpar. (D) as (C) and struck out heading and text of former subpar. (C). Text read as follows: “If tax is imposed under section 644(a)(1) with respect to the sale or exchange of any property of which the parent was the transferor, for purposes of applying subparagraph (A) to the taxable year of the parent in which such sale or exchange occurs—
“(i) taxable income of the parent shall be increased by the amount treated as included in gross income under section 644(a)(2)(A)(i), and
“(ii) the amount described in subparagraph (A)(ii) shall be increased by the amount of the excess referred to in section 644(a)(2)(A).”

(4) Net unearned income For purposes of this subsection—

(A) In general The term “net unearned income” means the excess of—

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(i) the portion of the adjusted gross income for the taxable year which is not attributable to earned income (as defined in section 911(d)(2)), over

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(ii) the sum of—

(I) the amount in effect for the taxable year under section 63(c)(5)(A) (relating to limitation on standard deduction in the case of certain dependents), plus

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(II) the greater of the amount described in subclause (I) or, if the child itemizes his deductions for the taxable year, the amount of the itemized deductions allowed by this chapter for the taxable year which are directly connected with the production of the portion of adjusted gross income referred to in clause (i).

(B) Limitation based on taxable income The amount of the net unearned income for any taxable year shall not exceed the individual’s taxable income for such taxable year.

(C) Treatment of distributions from qualified disability trusts For purposes of this subsection, in the case of any child who is a beneficiary of a qualified disability trust (as defined in section 642(b)(2)(C)(ii)), any amount included in the income of such child under sections 652 and 662 during a taxable year shall be considered earned income of such child for such taxable year.

Amended 2006

2006 Pub. L. 109-222 Pub. L. 109–222, § 510(b), added subpar. (C).

(5) Special rules for determining parent to whom subsection applies For purposes of this subsection, the parent whose taxable income shall be taken into account shall be—

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(A) in the case of parents who are not married (within the meaning of section 7703), the custodial parent (within the meaning of section 152(e)) of the child, and

(B) in the case of married individuals filing separately, the individual with the greater taxable income.

(6) Providing of parent’s TIN The parent of any child to whom this subsection applies for any taxable year shall provide the TIN of such parent to such child and such child shall include such TIN on the child’s return of tax imposed by this section for such taxable year.

(7) Election to claim certain unearned income of child on parent’s return

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(A) In general If—

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(i) any child to whom this subsection applies has gross income for the taxable year only from interest and dividends (including Alaska Permanent Fund dividends),

(ii) such gross income is more than the amount described in paragraph (4)(A)(ii)(I) and less than 10 times the amount so described,

Amended 1996

1996 Pub. L. 104-188 Pub. L. 104–188, § 1704(m)(1), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: “such gross income is more than $500 and less than $5,000,”.

(iii) no estimated tax payments for such year are made in the name and TIN of such child, and no amount has been deducted and withheld under section 3406, and

(iv) the parent of such child (as determined under paragraph (5)) elects the application of subparagraph (B),

such child shall be treated (other than for purposes of this paragraph) as having no gross income for such year and shall not be required to file a return under section 6012.

(B) Income included on parent’s return In the case of a parent making the election under this paragraph—

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(i) the gross income of each child to whom such election applies (to the extent the gross income of such child exceeds twice the amount described in paragraph (4)(A)(ii)(I)) shall be included in such parent’s gross income for the taxable year,

Amended 1996

1996 Pub. L. 104-188 Pub. L. 104–188, § 1704(m)(2)(A), substituted “twice the amount described in paragraph (4)(A)(ii)(I)” for “$1,000”.

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(ii) the tax imposed by this section for such year with respect to such parent shall be the amount equal to the sum of—

(I) the amount determined under this section after the application of clause (i), plus

(II) for each such child, 10 percent of the lesser of the amount described in paragraph (4)(A)(ii)(I) or the excess of the gross income of such child over the amount so described, and

Amended 1996, 2001, 2004

2004 Pub. L. 108-311 Pub. L. 108–311, § 408(a)(1), substituted “10 percent” for “10 percent.”
2001 Pub. L. 107-16 Pub. L. 107–16, § 101(c)(1), substituted “10 percent.” for “15 percent”.
1996 Pub. L. 104-188 Pub. L. 104–188, § 1704(m)(2)(B), amended subcl. (II) generally. Prior to amendment, subcl. (II) read as follows: “for each such child, the lesser of $75 or 15 percent of the excess of the gross income of such child over $500, and”.

(iii) any interest which is an item of tax preference under section 57(a)(5) of the child shall be treated as an item of tax preference of such parent (and not of such child).

(C) Regulations The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this paragraph.

(h) Maximum capital gains rate

§ 1.1(h)-1 Capital gains look-through rule for sales or exchanges of interests in a partnership, S corporation, or trust.

Amended 1986, 1990, 1993, 1997, 1998, 2001, 2003

2003 Pub. L. 108-27 Pub. L. 108–27, § 301(b)(1)(C), redesignated par. (12) as (10).
2001 Pub. L. 107-16 Pub. L. 107–16, § 101(c)(2)(B), struck out par. (13), which set out special rules for determination of 28-percent rate gain, unrecaptured section 1250 gain, pass-thru entities, and charitable remainder trusts.
1998 Pub. L. 105-206 Pub. L. 105–206, § 6005(d)(1), reenacted subsec. heading without change and amended text of subsec. (h) generally, substituting present provisions comprising pars. (1) to (13) for former similar provisions comprising pars. (1) to (11).
1998 Pub. L. 105-206 Pub. L. 105–206, § 5001(a)(4), struck out “for periods during 1997” after “Special rules” in par. heading and amended headings and text of subpars. (A) and (B) generally. Prior to amendment, subpars. (A) and (B) read as follows:
1998 “(A) Determination of 28-percent rate gain.—In applying paragraph (5)—
“(i) the amount determined under subclause (I) of paragraph (5)(A)(i) shall include long-term capital gain (not otherwise described in paragraph (5)(A)(i)) which is properly taken into account for the portion of the taxable year before May 7, 1997;
“(ii) the amounts determined under subclause (I) of paragraph (5)(A)(ii) shall include long-term capital loss (not otherwise described in paragraph (5)(A)(ii)) which is properly taken into account for the portion of the taxable year before May 7, 1997; and
“(iii) clauses (i)(I) and (ii)(I) of paragraph (5)(A) shall be applied by not taking into account any gain and loss on property held for more than 1 year but not more than 18 months which is properly taken into account for the portion of the taxable year after May 6, 1997, and before July 29, 1997.
1998 “(B) Other special rules.—
“(i) Determination of unrecaptured section 1250 gain not to include pre-may 7, 1997 gain.—The amount determined under paragraph (7)(A)(i) shall not include gain properly taken into account for the portion of the taxable year before May 7, 1997.
“(ii) Other transitional rules for 18-month holding period.—Paragraphs (6)(A) and (7)(A)(i)(II) shall be applied by substituting ‘1 year’ for ‘18 months’ with respect to gain properly taken into account for the portion of the taxable year after May 6, 1997, and before July 29, 1997.”
1998 Pub. L. 105-277 Pub. L. 105–277, § 4002(i)(1), substituted “paragraph (7)(A)(i)” for “paragraph (7)(A)” in introductory provisions.
1998 Pub. L. 105-277 Pub. L. 105–277, § 4002(i)(3), added subpar. (D).
1997 Pub. L. 105-34 Pub. L. 105–34 amended heading and text of subsec. (h) generally. Prior to amendment, text read as follows: “If a taxpayer has a net capital gain for any taxable year, then the tax imposed by this section shall not exceed the sum of—
“(1) a tax computed at the rates and in the same manner as if this subsection had not been enacted on the greater of—
“(A) taxable income reduced by the amount of the net capital gain, or
“(B) the amount of taxable income taxed at a rate below 28 percent, plus
“(2) a tax of 28 percent of the amount of taxable income in excess of the amount determined under paragraph (1).
For purposes of the preceding sentence, the net capital gain for any taxable year shall be reduced (but not below zero) by the amount which the taxpayer elects to take into account as investment income for the taxable year under section 163(d)(4)(B)(iii).”
1993 Pub. L. 103-66 Pub. L. 103–66, § 13206(d)(2), inserted as concluding provision at end “For purposes of the preceding sentence, the net capital gain for any taxable year shall be reduced (but not below zero) by the amount which the taxpayer elects to take into account as investment income for the taxable year under section 163(d)(4)(B)(iii).”
1990 Pub. L. 101-508 Pub. L. 101–508, § 11101(d)(2), redesignated subsec. (j) as (h) and struck out former subsec. (h) which provided tax schedules for taxable years beginning in 1987.
1986 Pub. L. 99-514 Pub. L. 99–514, § 101(a), in amending section generally, added subsecs. (g) and (h).

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(1) In general If a taxpayer has a net capital gain for any taxable year, the tax imposed by this section for such taxable year shall not exceed the sum of—

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(A) a tax computed at the rates and in the same manner as if this subsection had not been enacted on the greater of—

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(i) taxable income reduced by the net capital gain; or

(ii) the lesser of—

Amended 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 101(c)(2)(A), substituted “25 percent” for “28 percent”.

(I) the amount of taxable income taxed at a rate below 25 percent; or

Amended 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 101(c)(2)(A), substituted “25 percent” for “28 percent”.

(II) taxable income reduced by the adjusted net capital gain;

(B) 0 percent of so much of the adjusted net capital gain (or, if less, taxable income) as does not exceed the excess (if any) of—

Amended 2003, 2013

2013 Pub. L. 112-240 Pub. L. 112–240, § 102(c)(2), substituted “0 percent” for “5 percent (0 percent in the case of taxable years beginning after 2007)” in introductory provisions.
2003 Pub. L. 108-27 Pub. L. 108–27, § 301(a)(1), substituted “5 percent (0 percent in the case of taxable years beginning after 2007)” for “10 percent”.

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(i) the amount of taxable income which would (without regard to this paragraph) be taxed at a rate below 25 percent, over

(ii) the taxable income reduced by the adjusted net capital gain;

Amended 2003, 2013

2013 Pub. L. 112-240 Pub. L. 112–240, § 102(b)(1), added subpars. (C) and (D), redesignated former subpars. (D) and (E) as (E) and (F), respectively, and struck out former subpar. (C) which read as follows: “15 percent of the adjusted net capital gain (or, if less, taxable income) in excess of the amount on which a tax is determined under subparagraph (B);”.
2003 Pub. L. 108-27 Pub. L. 108–27, § 301(a)(2)(A), substituted “15 percent” for “20 percent”.

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(i) so much of the adjusted net capital gain (or, if less, taxable income) as exceeds the amount on which a tax is determined under subparagraph (B), or

(ii) the excess of—

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(I) the amount of taxable income which would (without regard to this paragraph) be taxed at a rate below 39.6 percent, over

(II) the sum of the amounts on which a tax is determined under subparagraphs (A) and (B),

(D) 20 percent of the adjusted net capital gain (or, if less, taxable income) in excess of the sum of the amounts on which tax is determined under subparagraphs (B) and (C),

Amended 2004, 2013

2013 Pub. L. 112-240 Pub. L. 112–240, § 102(b)(1), added subpars. (C) and (D), redesignated former subpars. (D) and (E) as (E) and (F), respectively, and struck out former subpar. (C) which read as follows: “15 percent of the adjusted net capital gain (or, if less, taxable income) in excess of the amount on which a tax is determined under subparagraph (B);”.
2004 Pub. L. 108-311 Pub. L. 108–311, § 402(a)(1), inserted “(determined without regard to paragraph (11))” after “net capital gain”.

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(E) 25 percent of the excess (if any) of—

Amended 2013

2013 Pub. L. 112-240 Pub. L. 112–240, § 102(b)(1), added subpars. (C) and (D), redesignated former subpars. (D) and (E) as (E) and (F), respectively, and struck out former subpar. (C) which read as follows: “15 percent of the adjusted net capital gain (or, if less, taxable income) in excess of the amount on which a tax is determined under subparagraph (B);”.

(i) the unrecaptured section 1250 gain (or, if less, the net capital gain (determined without regard to paragraph (11))), over

(ii) the excess (if any) of—

(I) the sum of the amount on which tax is determined under subparagraph (A) plus the net capital gain, over

(II) taxable income; and

(F) 28 percent of the amount of taxable income in excess of the sum of the amounts on which tax is determined under the preceding subparagraphs of this paragraph.

Amended 2013

2013 Pub. L. 112-240 Pub. L. 112–240, § 102(b)(1), added subpars. (C) and (D), redesignated former subpars. (D) and (E) as (E) and (F), respectively, and struck out former subpar. (C) which read as follows: “15 percent of the adjusted net capital gain (or, if less, taxable income) in excess of the amount on which a tax is determined under subparagraph (B);”.

(2) Net capital gain taken into account as investment income For purposes of this subsection, the net capital gain for any taxable year shall be reduced (but not below zero) by the amount which the taxpayer takes into account as investment income under section 163(d)(4)(B)(iii).

Amended 2003

2003 Pub. L. 108-27 Pub. L. 108–27, § 301(b)(1)(A), (B), redesignated par. (3) as (2) and struck out heading and text of former par. (2). Text read as follows:
2003 “(A) Reduction in 10-percent rate.—In the case of any taxable year beginning after December 31, 2000, the rate under paragraph (1)(B) shall be 8 percent with respect to so much of the amount to which the 10-percent rate would otherwise apply as does not exceed qualified 5-year gain, and 10 percent with respect to the remainder of such amount.
2003 “(B) Reduction in 20-percent rate.—The rate under paragraph (1)(C) shall be 18 percent with respect to so much of the amount to which the 20-percent rate would otherwise apply as does not exceed the lesser of—
“(i) the excess of qualified 5-year gain over the amount of such gain taken into account under subparagraph (A) of this paragraph; or
“(ii) the amount of qualified 5-year gain (determined by taking into account only property the holding period for which begins after December 31, 2000),
and 20 percent with respect to the remainder of such amount. For purposes of determining under the preceding sentence whether the holding period of property begins after December 31, 2000, the holding period of property acquired pursuant to the exercise of an option (or other right or obligation to acquire property) shall include the period such option (or other right or obligation) was held.”

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(3) Adjusted net capital gain For purposes of this subsection, the term “adjusted net capital gain” means the sum of—

Amended 2003

2003 Pub. L. 108-27 Pub. L. 108–27, § 302(e)(1), amended heading and text of par. (3) generally. Prior to amendment, text read as follows: “For purposes of this subsection, the term ‘adjusted net capital gain’ means net capital gain reduced (but not below zero) by the sum of—
“(A) unrecaptured section 1250 gain; and
“(B) 28-percent rate gain.”
2003 Pub. L. 108-27 Pub. L. 108–27, § 301(b)(1)(B), redesignated par. (4) as (3). Former par. (3) redesignated (2).

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(A) net capital gain (determined without regard to paragraph (11)) reduced (but not below zero) by the sum of—

(i) unrecaptured section 1250 gain, and

(ii) 28-percent rate gain, plus

(B) qualified dividend income (as defined in paragraph (11)).

(4) 28-percent rate gain For purposes of this subsection, the term “28-percent rate gain” means the excess (if any) of—

Amended 2003

2003 Pub. L. 108-27 Pub. L. 108–27, § 301(b)(1)(B), redesignated pars. (5) to (8) as (4) to (7), respectively. Former par. (4) redesignated (3).

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(A) the sum of—

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(i) collectibles gain; and

(ii) section 1202 gain, over

(B) the sum of—

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(i) collectibles loss;

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(ii) the net short-term capital loss; and

(iii) the amount of long-term capital loss carried under section 1212(b)(1)(B) to the taxable year.

(5) Collectibles gain and loss For purposes of this subsection—

Amended 1998, 2003

2003 Pub. L. 108-27 Pub. L. 108–27, § 301(b)(1)(B), redesignated pars. (5) to (8) as (4) to (7), respectively. Former par. (4) redesignated (3).
1998 Pub. L. 105-206 Pub. L. 105–206, § 5001(a)(1), amended par. (5) generally. Prior to amendment, par. (5) read as follows:
1998 “(5) 28-percent rate gain.—For purposes of this subsection—
“(A) In general.—The term ‘28-percent rate gain’ means the excess (if any) of—
“(i) the sum of—
“(I) the aggregate long-term capital gain from property held for more than 1 year but not more than 18 months;
“(II) collectibles gain; and
“(III) section 1202 gain, over
“(ii) the sum of—
“(I) the aggregate long-term capital loss (not described in subclause (IV)) from property referred to in clause (i)(I);
“(II) collectibles loss;
“(III) the net short-term capital loss; and
“(IV) the amount of long-term capital loss carried under section 1212(b)(1)(B) to the taxable year.
“(B) Special rules.—
“(i) Short sale gains and holding periods.—Rules similar to the rules of section 1233(b) shall apply where the substantially identical property has been held more than 1 year but not more than 18 months; except that, for purposes of such rules—
“(I) section 1233(b)(1) shall be applied by substituting ‘18 months’ for ‘1 year’ each place it appears; and
“(II) the holding period of such property shall be treated as being 1 year on the day before the earlier of the date of the closing of the short sale or the date such property is disposed of.
“(ii) Long-term losses.—Section 1233(d) shall be applied separately by substituting ‘18 months’ for ‘1 year’ each place it appears.
“(iii) Options.—A rule similar to the rule of section 1092(f) shall apply where the stock was held for more than 18 months.
“(iv) Section 1256 contracts.—Amounts treated as long-term capital gain or loss under section 1256(a)(3) shall be treated as attributable to property held for more than 18 months.”

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(A) In general The terms “collectibles gain” and “collectibles loss” mean gain or loss (respectively) from the sale or exchange of a collectible (as defined in section 408(m) without regard to paragraph (3) thereof) which is a capital asset held for more than 1 year but only to the extent such gain is taken into account in computing gross income and such loss is taken into account in computing taxable income.

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(B) Partnerships, etc. For purposes of subparagraph (A), any gain from the sale of an interest in a partnership, S corporation, or trust which is attributable to unrealized appreciation in the value of collectibles shall be treated as gain from the sale or exchange of a collectible. Rules similar to the rules of section 751 shall apply for purposes of the preceding sentence.

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(6) Unrecaptured section 1250 gain For purposes of this subsection—

Amended 2003

2003 Pub. L. 108-27 Pub. L. 108–27, § 301(b)(1)(B), redesignated pars. (5) to (8) as (4) to (7), respectively. Former par. (4) redesignated (3).

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(A) In general The term “unrecaptured section 1250 gain” means the excess (if any) of—

Amended 1998

1998 Pub. L. 105-206 Pub. L. 105–206, § 5001(a)(2), substituted “1 year” for “18 months”.

(i) the amount of long-term capital gain (not otherwise treated as ordinary income) which would be treated as ordinary income if section 1250(b)(1) included all depreciation and the applicable percentage under section 1250(a) were 100 percent, over

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(ii) the excess (if any) of—

(I) the amount described in paragraph (4)(B); over

Amended 2004

2004 Pub. L. 108-311 Pub. L. 108–311, § 408(a)(2)(A), substituted “(4)(B)” for “(5)(B)”.

(II) the amount described in paragraph (4)(A).

Amended 2004

2004 Pub. L. 108-311 Pub. L. 108–311, § 408(a)(2)(B), substituted “(4)(A)” for “(5)(A)”.

(B) Limitation with respect to section 1231 property The amount described in subparagraph (A)(i) from sales, exchanges, and conversions described in section 1231(a)(3)(A) for any taxable year shall not exceed the net section 1231 gain (as defined in section 1231(c)(3)) for such year.

(7) Section 1202 gain For purposes of this subsection, the term “section 1202 gain” means the excess of—

Amended 2003

2003 Pub. L. 108-27 Pub. L. 108–27, § 301(b)(1)(B), redesignated pars. (5) to (8) as (4) to (7), respectively. Former par. (4) redesignated (3).

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(A) the gain which would be excluded from gross income under section 1202 but for the percentage limitation in section 1202(a), over

Amended 1998

1998 Pub. L. 105-206 Pub. L. 105–206, § 5001(a)(3), amended cls. (i) and (ii) generally. Prior to amendment, cls. (i) and (ii) read as follows:
1998 “(i) the amount of long-term capital gain (not otherwise treated as ordinary income) which would be treated as ordinary income if—
“(I) section 1250(b)(1) included all depreciation and the applicable percentage under section 1250(a) were 100 percent, and
“(II) only gain from property held for more than 18 months were taken into account, over
1998 “(ii) the excess (if any) of—
“(I) the amount described in paragraph (5)(A)(ii), over
“(II) the amount described in paragraph (5)(A)(i).”

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(B) the gain excluded from gross income under section 1202.

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(8) Coordination with recapture of net ordinary losses under section 1231 If any amount is treated as ordinary income under section 1231(c), such amount shall be allocated among the separate categories of net section 1231 gain (as defined in section 1231(c)(3)) in such manner as the Secretary may by forms or regulations prescribe.

Amended 2003

2003 Pub. L. 108-27 Pub. L. 108–27, § 301(b)(1)(C), redesignated par. (10) as (8). Former par. (8) redesignated (7).

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(9) Regulations The Secretary may prescribe such regulations as are appropriate (including regulations requiring reporting) to apply this subsection in the case of sales and exchanges by pass-thru entities and of interests in such entities.

Amended 2003

2003 Pub. L. 108-27 Pub. L. 108–27, § 301(b)(1)(A), (C), redesignated par. (11) as (9) and struck out heading and text of former par. (9). Text read as follows: “For purposes of this subsection, the term ‘qualified 5-year gain’ means the aggregate long-term capital gain from property held for more than 5 years. The determination under the preceding sentence shall be made without regard to collectibles gain, gain described in paragraph (7)(A)(i), and section 1202 gain.”

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(10) Pass-thru entity defined For purposes of this subsection, the term “pass-thru entity” means—

Amended 2003, 2004

2004 Pub. L. 108-357 Pub. L. 108–357, § 413(c)(1)(A), inserted “and” at end of subpar. (F), redesignated subpar. (H) as (G), and struck out former subpar. (G) which read as follows: “a foreign investment company which is described in section 1246(b)(1) and for which an election is in effect under section 1247; and”.
2003 Pub. L. 108-27 Pub. L. 108–27, § 301(b)(1)(C), redesignated par. (12) as (10). Former par. (10) redesignated (8).

(A) a regulated investment company;

(B) a real estate investment trust;

(D) a partnership;

(E) an estate or trust;

(F) a common trust fund; and

Amended 2004

2004 Pub. L. 108-357 Pub. L. 108–357, § 413(c)(1)(A), inserted “and” at end of subpar. (F), redesignated subpar. (H) as (G), and struck out former subpar. (G) which read as follows: “a foreign investment company which is described in section 1246(b)(1) and for which an election is in effect under section 1247; and”.

(G) a qualified electing fund (as defined in section 1295).

Amended 2004

2004 Pub. L. 108-357 Pub. L. 108–357, § 413(c)(1)(A), inserted “and” at end of subpar. (F), redesignated subpar. (H) as (G), and struck out former subpar. (G) which read as follows: “a foreign investment company which is described in section 1246(b)(1) and for which an election is in effect under section 1247; and”.

(11) Dividends taxed as net capital gain

Amended 2003

2003 Pub. L. 108-27 Pub. L. 108–27, § 302(a), added par. (11).
2003 Pub. L. 108-27 Pub. L. 108–27, § 301(b)(1)(C), redesignated par. (11) as (9).

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Cases: Rodriguez v. Commissioner, 722 F.3d 306 (5th Cir. 2013)

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(A) In general For purposes of this subsection, the term “net capital gain” means net capital gain (determined without regard to this paragraph) increased by qualified dividend income.

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(B) Qualified dividend income For purposes of this paragraph—

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(i) In general The term “qualified dividend income” means dividends received during the taxable year from—

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(I) domestic corporations, and

(II) qualified foreign corporations.

(ii) Certain dividends excluded Such term shall not include—

(I) any dividend from a corporation which for the taxable year of the corporation in which the distribution is made, or the preceding taxable year, is a corporation exempt from tax under section 501 or 521,

(II) any amount allowed as a deduction under section 591 (relating to deduction for dividends paid by mutual savings banks, etc.), and

(III) any dividend described in section 404(k).

(iii) Coordination with section 246(c) Such term shall not include any dividend on any share of stock—

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(I) with respect to which the holding period requirements of section 246(c) are not met (determined by substituting in section 246(c) “60 days” for “45 days” each place it appears and by substituting “121-day period” for “91-day period”), or

Amended 2004

2004 Pub. L. 108-311 Pub. L. 108–311, § 402(a)(2), substituted “substituting in section 246(c)” for “substituting in section 246(c)(1)”, “121-day period” for “120-day period”, and “91-day period” for “90-day period”.

(II) to the extent that the taxpayer is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property.

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(i) In general Except as otherwise provided in this paragraph, the term “qualified foreign corporation” means any foreign corporation if—

NOT“Except as otherwise provided in this paragraph,” Opening words

“any foreign corporation” Opening words

Textual readingANY OF= a qualified foreign corporation

(I) such corporation is incorporated in a possession of the United States, or

(II) such corporation is eligible for benefits of a comprehensive income tax treaty with the United States which the Secretary determines is satisfactory for purposes of this paragraph and which includes an exchange of information program.

“Which the Secretary determines” leaves this to Treasury. No regulation cites this provision (eCFR, Oct 19, 2026)

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(ii) Dividends on stock readily tradable on United States securities market A foreign corporation not otherwise treated as a qualified foreign corporation under clause (i) shall be so treated with respect to any dividend paid by such corporation if the stock with respect to which such dividend is paid is readily tradable on an established securities market in the United States.

(iii) Exclusion of dividends of certain foreign corporations Such term shall not include—

Amended 2004, 2017

2017 Pub. L. 115-97 Pub. L. 115–97, § 14223(a), substituted “shall not include—” for “shall not include”, inserted subcl. (I) designation before “any foreign corporation”, and added subcl. (II).
2004 Pub. L. 108-357 Pub. L. 108–357, § 413(c)(1)(B), struck out “a foreign personal holding company (as defined in section 552), a foreign investment company (as defined in section 1246(b)), or” before “a passive foreign investment”.

(I) any foreign corporation which for the taxable year of the corporation in which the dividend was paid, or the preceding taxable year, is a passive foreign investment company (as defined in section 1297), and

(II) any corporation which first becomes a surrogate foreign corporation (as defined in section 7874(a)(2)(B)) after the date of the enactment of this subclause, other than a foreign corporation which is treated as a domestic corporation under section 7874(b).

(iv) Coordination with foreign tax credit limitation Rules similar to the rules of section 904(b)(2)(B) shall apply with respect to the dividend rate differential under this paragraph.

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(D) Special rules

(i) Amounts taken into account as investment income Qualified dividend income shall not include any amount which the taxpayer takes into account as investment income under section 163(d)(4)(B).

(ii) Extraordinary dividends If a taxpayer to whom this section applies receives, with respect to any share of stock, qualified dividend income from 1 or more dividends which are extraordinary dividends (within the meaning of section 1059(c)), any loss on the sale or exchange of such share shall, to the extent of such dividends, be treated as long-term capital loss.

Amended 2004

2004 Pub. L. 108-311 Pub. L. 108–311, § 402(a)(3), substituted “a taxpayer to whom this section applies” for “an individual”.

(iii) Treatment of dividends from regulated investment companies and real estate investment trusts A dividend received from a regulated investment company or a real estate investment trust shall be subject to the limitations prescribed in sections 854 and 857.

(i) Rate reductions after 2000

§ 1.1(i)-1T Questions and answers relating to the tax on unearned income certain minor children (Temporary).

Amended 1986, 1988, 1989, 1990, 2001

2001 Pub. L. 107-16 Pub. L. 107–16, § 101(a), added subsec. (i).
1990 Pub. L. 101-508 Pub. L. 101–508, § 11101(d)(2), redesignated subsec. (i) as (g).
1989 Pub. L. 101-239 Pub. L. 101–239, § 7816(b), inserted “(other than for purposes of this paragraph)” after “shall be treated” in concluding provisions.
1988 Pub. L. 100-647 Pub. L. 100–647, § 1014(e)(6), substituted “custodial parent (within the meaning of section 152(e))” for “custodial parent”.
1988 Pub. L. 100-647 Pub. L. 100–647, § 6006(a), added par. (7).
1986 Pub. L. 99-514 Pub. L. 99–514, § 1411(a), added subsec. (i).

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(1) 10-percent rate bracket

Amended 2008

2008 Pub. L. 110-185 Pub. L. 110–185 struck out heading and text of subpar. (D). Text read as follows: “This paragraph shall not apply to any taxable year to which section 6428 applies.”

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(A) In general In the case of taxable years beginning after December 31, 2000—

(i) the rate of tax under subsections (a), (b), (c), and (d) on taxable income not over the initial bracket amount shall be 10 percent, and

(ii) the 15 percent rate of tax shall apply only to taxable income over the initial bracket amount but not over the maximum dollar amount for the 15-percent rate bracket.

(B) Initial bracket amount For purposes of this paragraph, the initial bracket amount is—

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(i) $14,000 in the case of subsection (a),

Amended 2003, 2004

2004 Pub. L. 108-311 Pub. L. 108–311, § 101(d)(1), struck out “($12,000 in the case of taxable years beginning after December 31, 2004, and before January 1, 2008)” after “$14,000”.
2003 Pub. L. 108-27 Pub. L. 108–27, § 104(a), substituted “($12,000 in the case of taxable years beginning after December 31, 2004, and before January 1, 2008)” for “($12,000 in the case of taxable years beginning before January 1, 2008)”.

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(ii) $10,000 in the case of subsection (b), and

(iii) ½ the amount applicable under clause (i) (after adjustment, if any, under subparagraph (C)) in the case of subsections (c) and (d).

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(C) Inflation adjustment In prescribing the tables under subsection (f) which apply with respect to taxable years beginning in calendar years after 2003—

Amended 2003, 2004

2004 Pub. L. 108-311 Pub. L. 108–311, § 101(d)(2), reenacted heading without change and amended text generally, substituting provisions relating to inflation adjustment in calendar years after 2003 for such provisions in calendar years after 2000.
2003 Pub. L. 108-27 Pub. L. 108–27, § 104(b), amended heading and text of subpar. (C) generally. Text read as follows: “In prescribing the tables under subsection (f) which apply with respect to taxable years beginning in calendar years after 2000—
“(i) the Secretary shall make no adjustment to the initial bracket amount for any taxable year beginning before January 1, 2009,
“(ii) the cost-of-living adjustment used in making adjustments to the initial bracket amount for any taxable year beginning after December 31, 2008, shall be determined under subsection (f)(3) by substituting ‘2007’ for ‘1992’ in subparagraph (B) thereof, and
“(iii) such adjustment shall not apply to the amount referred to in subparagraph (B)(iii).
If any amount after adjustment under the preceding sentence is not a multiple of $50, such amount shall be rounded to the next lowest multiple of $50.”

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(i) the cost-of-living adjustment shall be determined under subsection (f)(3) by substituting “2002” for “2016” in subparagraph (A)(ii) thereof, and

Amended 2017

2017 Pub. L. 115-97 Pub. L. 115–97, § 11002(c)(2)(A), substituted “for ‘2016’ in subparagraph (A)(ii)” for “for ‘1992’ in subparagraph (B)”.

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(ii) the adjustments under clause (i) shall not apply to the amount referred to in subparagraph (B)(iii).

If any amount after adjustment under the preceding sentence is not a multiple of $50, such amount shall be rounded to the next lowest multiple of $50.

(2) 25-, 28-, and 33-percent rate brackets The tables under subsections (a), (b), (c), (d), and (e) shall be applied—

Amended 2003, 2013

2013 Pub. L. 112-240 Pub. L. 112–240, § 101(b)(1)(A), amended par. (2) generally. Prior to amendment, par. (2) related to reductions in rates after June 30, 2001.
2003 Pub. L. 108-27 Pub. L. 108–27, § 105(a), amended table generally. Prior to amendment, table read as follows:

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(A) by substituting “25%” for “28%” each place it appears (before the application of subparagraph (B)),

(B) by substituting “28%” for “31%” each place it appears, and

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(3) Modifications to income tax brackets for high-income taxpayers

Amended 1989, 2013

2013 Pub. L. 112-240 Pub. L. 112–240, § 101(b)(1)(B), added par. (3) and redesignated former par. (3) as (4).
1989 Pub. L. 101-239 Pub. L. 101–239, § 7811(j)(1), redesignated subpar. (C), relating to special rule where parent has different taxable year, as (D).

(A) 35-percent rate bracket In the case of taxable years beginning after December 31, 2012—

Amended 1988

1988 Pub. L. 100-647 Pub. L. 100–647, § 1014(e)(2), substituted “any exclusion, deduction, or credit” for “any deduction or credit”.

(i) the rate of tax under subsections (a), (b), (c), and (d) on a taxpayer’s taxable income in the highest rate bracket shall be 35 percent to the extent such income does not exceed an amount equal to the excess of—

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(I) the applicable threshold, over

(II) the dollar amount at which such bracket begins, and

(ii) the 39.6 percent rate of tax under such subsections shall apply only to the taxpayer’s taxable income in such bracket in excess of the amount to which clause (i) applies.

(B) Applicable threshold For purposes of this paragraph, the term “applicable threshold” means—

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(i) $450,000 in the case of subsection (a),

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(ii) $425,000 in the case of subsection (b),

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(iii) $400,000 in the case of subsection (c), and

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(iv) ½ the amount applicable under clause (i) (after adjustment, if any, under subparagraph (C)) in the case of subsection (d).

(C) Inflation adjustment For purposes of this paragraph, with respect to taxable years beginning in calendar years after 2013, each of the dollar amounts under clauses (i), (ii), and (iii) of subparagraph (B) shall be adjusted in the same manner as under paragraph (1)(C)(i), except that subsection (f)(3)(A)(ii) shall be applied by substituting “2012” for “2016”.

Amended 1988, 1989, 2017

2017 Pub. L. 115-97 Pub. L. 115–97, § 11002(c)(2)(B), substituted “subsection (f)(3)(A)(ii) shall be applied by substituting ‘2012’ for ‘2016’ ” for “subsection (f)(3)(B) shall be applied by substituting ‘2012’ for ‘1992’ ”.
1989 Pub. L. 101-239 Pub. L. 101–239, § 7811(j)(1), redesignated subpar. (C), relating to special rule where parent has different taxable year, as (D).
1988 Pub. L. 100-647 Pub. L. 100–647, § 1014(e)(7), added subpar. (C) relating to special rule where parent has different taxable year.
1988 Pub. L. 100-647 Pub. L. 100–647, § 1014(e)(1), added subpar. (C) relating to coordination with section 644.

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(4) Adjustment of tables The Secretary shall adjust the tables prescribed under subsection (f) to carry out this subsection.

Amended 1988, 2013

2013 Pub. L. 112-240 Pub. L. 112–240, § 101(b)(1)(B), added par. (3) and redesignated former par. (3) as (4).
1988 Pub. L. 100-647 Pub. L. 100–647, § 1014(e)(3)(A), substituted “adjusted gross income” for “gross income” and inserted “attributable to” after “which is not”.
1988 Pub. L. 100-647 Pub. L. 100–647, § 1014(e)(3)(B)–(D), substituted “his deductions” for “his deduction”, “the itemized deductions allowed” for “the deductions allowed”, and “adjusted gross income” for “gross income”.

(j) Modifications for taxable years beginning after 2017

Amended 1986, 1990, 2017, 2025

2025 Pub. L. 119-21 Pub. L. 119–21, § 70101(a)(2), substituted “beginning after 2017” for “2018 through 2025” in heading.
2017 Pub. L. 115-97 Pub. L. 115–97, § 11001(a), added subsec. (j).
1990 Pub. L. 101-508 Pub. L. 101–508, § 11101(d)(2), redesignated subsec. (j) as (h).
1990 Pub. L. 101-508 Pub. L. 101–508, § 11101(c), amended subsec. (j) generally. Prior to amendment, subsec. (j) read as follows:
1990 “(1) In general.—If a taxpayer has a net capital gain for any taxable year to which this subsection applies, then the tax imposed by this section shall not exceed the sum of—
“(A) a tax computed at the rates and in the same manner as if this subsection had not been enacted on the greater of—
“(i) the taxable income reduced by the amount of net capital gain, or
“(ii) the amount of taxable income taxed at a rate below 28 percent, plus
“(B) a tax of 28 percent of the amount of taxable income in excess of the amount determined under subparagraph (A), plus
“(C) the amount of increase determined under subsection (g).
1990 “(2) Years to which subsection applies.—This subsection shall apply to—
“(A) any taxable year beginning in 1987, and
“(B) any taxable year beginning after 1987 if the highest rate of tax set forth in subsection (a), (b), (c), (d), or (e) (whichever applies) for such taxable year exceeds 28 percent.”
1986 Pub. L. 99-514 Pub. L. 99–514, § 302(a), added subsec. (j).

(1) In general In the case of a taxable year beginning after December 31, 2017—

Amended 2025

2025 Pub. L. 119-21 Pub. L. 119–21, § 70101(a)(1), struck out “, and before January 1, 2026” after “December 31, 2017” in introductory provisions.

(A) subsection (i) shall not apply, and

(B) this section (other than subsection (i)) shall be applied as provided in paragraphs (2) through (6).

(2) Rate tables

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(A) Married individuals filing joint returns and surviving spouses The following table shall be applied in lieu of the table contained in subsection (a): If taxable income is:The tax is: Not over $19,05010% of taxable income. Over $19,050 but not over $77,400$1,905, plus 12% of the excess over $19,050. Over $77,400 but not over $165,000$8,907, plus 22% of the excess over $77,400. Over $165,000 but not over $315,000$28,179, plus 24% of the excess over $165,000. Over $315,000 but not over $400,000$64,179, plus 32% of the excess over $315,000. Over $400,000 but not over $600,000$91,379, plus 35% of the excess over $400,000. Over $600,000$161,379, plus 37% of the excess over $600,000.

(B) Heads of households The following table shall be applied in lieu of the table contained in subsection (b): If taxable income is:The tax is: Not over $13,60010% of taxable income. Over $13,600 but not over $51,800$1,360, plus 12% of the excess over $13,600. Over $51,800 but not over $82,500$5,944, plus 22% of the excess over $51,800. Over $82,500 but not over $157,500$12,698, plus 24% of the excess over $82,500. Over $157,500 but not over $200,000$30,698, plus 32% of the excess over $157,500. Over $200,000 but not over $500,000$44,298, plus 35% of the excess over $200,000. Over $500,000$149,298, plus 37% of the excess over $500,000.

(C) Unmarried individuals other than surviving spouses and heads of households The following table shall be applied in lieu of the table contained in subsection (c): If taxable income is:The tax is: Not over $9,52510% of taxable income. Over $9,525 but not over $38,700$952.50, plus 12% of the excess over $9,525. Over $38,700 but not over $82,500$4,453.50, plus 22% of the excess over $38,700. Over $82,500 but not over $157,500$14,089.50, plus 24% of the excess over $82,500. Over $157,500 but not over $200,000$32,089.50, plus 32% of the excess over $157,500. Over $200,000 but not over $500,000$45,689.50, plus 35% of the excess over $200,000. Over $500,000$150,689.50, plus 37% of the excess over $500,000.

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(D) Married individuals filing separate returns The following table shall be applied in lieu of the table contained in subsection (d): If taxable income is:The tax is: Not over $9,52510% of taxable income. Over $9,525 but not over $38,700$952.50, plus 12% of the excess over $9,525. Over $38,700 but not over $82,500$4,453.50, plus 22% of the excess over $38,700. Over $82,500 but not over $157,500$14,089.50, plus 24% of the excess over $82,500. Over $157,500 but not over $200,000$32,089.50, plus 32% of the excess over $157,500. Over $200,000 but not over $300,000$45,689.50, plus 35% of the excess over $200,000. Over $300,000$80,689.50, plus 37% of the excess over $300,000.

(E) Estates and trusts The following table shall be applied in lieu of the table contained in subsection (e): If taxable income is:The tax is: Not over $2,55010% of taxable income. Over $2,550 but not over $9,150$255, plus 24% of the excess over $2,550. Over $9,150 but not over $12,500$1,839, plus 35% of the excess over $9,150. Over $12,500$3,011.50, plus 37% of the excess over $12,500.

(F) References to rate tables Any reference in this title to a rate of tax under subsection (c) shall be treated as a reference to the corresponding rate bracket under subparagraph (C) of this paragraph, except that the reference in section 3402(q)(1) to the third lowest rate of tax applicable under subsection (c) shall be treated as a reference to the fourth lowest rate of tax under subparagraph (C).

(3) Adjustments

(A) No adjustment in 2018 The tables contained in paragraph (2) shall apply without adjustment for taxable years beginning after December 31, 2017, and before January 1, 2019.

(B) Subsequent years For taxable years beginning after December 31, 2018, the Secretary shall prescribe tables which shall apply in lieu of the tables contained in paragraph (2) in the same manner as under paragraphs (1) and (2) of subsection (f) (applied without regard to clauses (i) and (ii) of subsection (f)(2)(A)), except that in prescribing such tables—

(i) solely for purposes of determining the dollar amounts at which any rate bracket higher than 12 percent ends and at which any rate bracket higher than 22 percent begins, subsection (f)(3) shall be applied by substituting “calendar year 2017” for “calendar year 2016” in subparagraph (A)(ii) thereof,

Amended 2025

2025 Pub. L. 119-21 Pub. L. 119–21, § 70101(b), inserted “solely for purposes of determining the dollar amounts at which any rate bracket higher than 12 percent ends and at which any rate bracket higher than 22 percent begins,” before “subsection (f)(3)”.

(ii) subsection (f)(7)(B) shall apply to any unmarried individual other than a surviving spouse or head of household, and

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(iii) subsection (f)(8) shall not apply.

[(4) Repealed. Pub. L. 116–94, div. O, title V, § 501(a), Dec. 20, 2019, 133 Stat. 3180]

Amended 2019

2019 Pub. L. 116-94 Pub. L. 116–94 struck out par. (4) which related to special rules for certain children with unearned income.

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(5) Application of current income tax brackets to capital gains brackets

(A) In general Section 1(h)(1) shall be applied—

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(i) by substituting “below the maximum zero rate amount” for “which would (without regard to this paragraph) be taxed at a rate below 25 percent” in subparagraph (B)(i), and

(ii) by substituting “below the maximum 15-percent rate amount” for “which would (without regard to this paragraph) be taxed at a rate below 39.6 percent” in subparagraph (C)(ii)(I).

(B) Maximum amounts defined For purposes of applying section 1(h) with the modifications described in subparagraph (A)—

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(i) Maximum zero rate amount The maximum zero rate amount shall be—

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(I) in the case of a joint return or surviving spouse, $77,200,

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(II) in the case of an individual who is a head of household (as defined in section 2(b)), $51,700,

(III) in the case of any other individual (other than an estate or trust), an amount equal to ½ of the amount in effect for the taxable year under subclause (I), and

(IV) in the case of an estate or trust, $2,600.

(ii) Maximum 15-percent rate amount The maximum 15-percent rate amount shall be—

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(I) in the case of a joint return or surviving spouse, $479,000 (½ such amount in the case of a married individual filing a separate return),

(II) in the case of an individual who is the head of a household (as defined in section 2(b)), $452,400,

(III) in the case of any other individual (other than an estate or trust), $425,800, and

(IV) in the case of an estate or trust, $12,700.

(C) Inflation adjustment In the case of any taxable year beginning after 2018, each of the dollar amounts in clauses (i) and (ii) of subparagraph (B) shall be increased by an amount equal to—

(i) such dollar amount, multiplied by

(ii) the cost-of-living adjustment determined under subsection (f)(3) for the calendar year in which the taxable year begins, determined by substituting “calendar year 2017” for “calendar year 2016” in subparagraph (A)(ii) thereof.

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If any increase under this subparagraph is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50.

(6) Section 15 not to apply Section 15 shall not apply to any change in a rate of tax by reason of this subsection.

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