<P> In the United Kingdom of Great Britain and Ireland, income tax was reintroduced by Sir Robert Peel by the Income Tax Act 1842 . Peel, as a Conservative, had opposed income tax in the 1841 general election, but a growing budget deficit required a new source of funds . The new income tax, based on Addington's model, was imposed on incomes above £ 150 (equivalent to £ 12,959 in 2016), . Although this measure was initially intended to be temporary, it soon became a fixture of the British taxation system . </P> <P> A committee was formed in 1851 under Joseph Hume to investigate the matter, but failed to reach a clear recommendation . Despite the vociferous objection, William Gladstone, Chancellor of the Exchequer from 1852, kept the progressive income tax, and extended it to cover the costs of the Crimean War . By the 1860s, the progressive tax had become a grudgingly accepted element of the English fiscal system . </P> <P> The US federal government imposed the first personal income tax, on August 5, 1861, to help pay for its war effort in the American Civil War - (3% of all incomes over US $800) (equivalent to $21,800 in 2017). This tax was repealed and replaced by another income tax in 1862 . It was only in 1894 that the first peacetime income tax was passed through the Wilson - Gorman tariff . The rate was 2% on income over $4000 (equivalent to $113,000 in 2017), which meant fewer than 10% of households would pay any . The purpose of the income tax was to make up for revenue that would be lost by tariff reductions . The US Supreme Court ruled the income tax unconstitutional, the 10th amendment forbidding any powers not expressed in the US Constitution, and there being no power to impose any other than a direct tax by apportionment . </P> <P> In 1913, the Sixteenth Amendment to the United States Constitution made the income tax a permanent fixture in the U.S. tax system . In fiscal year 1918, annual internal revenue collections for the first time passed the billion - dollar mark, rising to $5.4 billion by 1920 . The amount of income collected via income tax has varied dramatically, from 1% in the early days of US income tax to taxation rates of over 90% during WW2 . </P>

When did federal income tax came into being