Recent Federal and State Income Tax

Income tax collections are highly dependent on the economy. In recent years the federal and state governments have collected around 13 percent of GDP in income tax, but tax collections dip sharply in each recession: to 12 percent GDP in 1992, to 10 percent GDP in 2003; to 9 percent GDP in 2010.

Overall, the federal income tax collects about 80 percent of the total income tax take, and the state income taxes collect about 20 percent of the take.

US Federal and State Income Tax Since 1900

The modern federal income tax began in 1913, and quickly collected nearly 5 percent of GDP in World War I.

In the 1920s and 1930s federal income tax collections declined to 2-3 percent of GDP, but in World War II shot up to 15 percent of GDP. State income tax collections were very small, at 0.2 percent GDP in 1930 and 0.35 percent in 1940.

Since World War II the federal income tax has chugged along between 9 adn 11 percent of GDP.

Since World War II the state income taxes have slowly increased, hitting 1 percent GDP in 1969, 2 percent in 1995, peaking at 2.23 percent GDP in 2008.

Individual vs. Corporate Income Tax Shares

The income tax was initially paid only by corporations, but starting in World War I, it broke down about 50 percent between individuals and corporations.

After World War II, the corporate income tax share began to shrink, going below 40 percent share in 1950, 30 percent share in 1968, and 20 percent share in 1981.

Since the mid 1980s, the corporate income tax has fluctuated along between 15 to 20 percent of income tax collections.

Federal, State, Local Revenue in 20th Century

At the start of the 20th century, about half of government revenue was local government revenue. Out of a total of 7 percent of GDP, a full 3.5 percent was collected at the local level. Federal revenue spiked in World War I, but by the mid 1920s, local government revenue and federal revenue were about equal at 5 percent of GDP, with state revenue below 2 percent of GDP. During the 1930s this changed, as state revenue surged to 5 percent of GDP while federal revenue increased to 7 to 8 percent of GDP and local revenue increased to about 6 percent of GDP. After the spike of World War II, when federal revenue briefly hit almost 24 percent of GDP, state and local governments entered the 1950s at about 4 percent of GDP while federal revenue fluctuated between 16 and 18 percent of GDP. Since the 1950s state and local revenue has steadily increased, with state revenue reaching 10 percent of GDP and local revenue reaching 6.5 percent of GDP in 2000.

After major revenue fluctuations in the dot-com recession of 2001-02 and the Great Recession of 2008-09 federal revenue in the mid 2010s was about 17 percent GDP, state revenue 8 percent GDP and local revenue 6.5 percent GDP

Suggested Video: All About Income Tax

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Revenue Data Sources

Revenue data is from official government sources.

• Federal revenue data since 1962 comes from the president’s budget.
  
• All other revenue data comes from the US Census Bureau.

Gross Domestic Product data comes from US Bureau of Economic Analysis and measuringworth.com.

Detailed table of revenue data sources here.

Federal revenue data begins in 1792.

State and local revenue data begins in 1820.

State and local revenue data for individual states begins in 1957.

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