What Is The Income Tax Act?

The income tax act is the tax code that governs the tax rates that taxpayers pay. The income tax rate originates out of the 16th amendment to the U.S. Constitution, which created the income tax code for the United States. The subsequent tax acts of the 1930s, 1950s and 1986 further codified the tax code into separate tax acts.

What is a Tax Act?

A tax act sets forth the tax rate tables and allowable credits and deductions that a taxpayer can take. The tax act is an amendment or change to the tax code and happen frequently as a need for revenue or changes to the tax code are warranted. For example, the tax rates for individuals and businesses were simplified in 2001 through passage of the Economic Growth and Tax Relief Reconciliation Act.

Changes to the Tax Code

Congress has the power to amend the tax code through passage of tax acts. This is done on a periodic basis and once passed is reflected in rules and regulations that are issued by the Internal Revenue Service (IRS). It is the role of the IRS to enforce any tax act that has been passed by Congress and signed into law by the President of the United States.