The Sixteenth Amendment

The Sixteenth Amendment provides that Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states and without regard to any census or enumeration. The original Constitution required direct taxes to be divided among the states by population, and in Pollock v. Farmers' Loan and Trust Co. in 1895 the Supreme Court held that a tax on income from property was a direct tax, striking down the federal income tax of 1894.

Progressives and farm-state lawmakers pushed for an amendment to allow an income tax, which they saw as fairer than tariffs and excise taxes that fell heavily on ordinary consumers. Congress proposed it in 1909, partly as a compromise during a tariff fight, and it was ratified on February 3, 1913. The first modern income tax followed that year, with a top rate of 7 percent paid by a small share of households, and the Bureau of Internal Revenue, later the IRS, took on collection.

The income tax grew into the backbone of federal finance, expanding to most workers during World War II through withholding, and the individual income tax now supplies about half of federal revenue. In Moore v. United States in 2024, the Supreme Court upheld a one-time tax on certain undistributed foreign earnings but left open whether income must be realized before it can be taxed, a question relevant to proposals for taxing wealth. Courts have consistently rejected arguments that the amendment was improperly ratified or that wages are not income.