The Tax Reform Act of 1976 was passed by the

United States Congress The United States Congress is the legislature, legislative branch of the federal government of the United States. It is a Bicameralism, bicameral legislature, including a Lower house, lower body, the United States House of Representatives, ...

in September 1976, and signed into law by

President President most commonly refers to: *President (corporate title) * President (education), a leader of a college or university *President (government title) President may also refer to: Arts and entertainment Film and television *'' Præsident ...

Gerald Ford Gerald Rudolph Ford Jr. (born Leslie Lynch King Jr.; July 14, 1913December 26, 2006) was the 38th president of the United States, serving from 1974 to 1977. A member of the Republican Party (United States), Republican Party, Ford assumed the p ...

on October 4, 1976, becoming . The act increased the percentage

standard deduction Under United States tax law, the standard deduction is a dollar amount that non- itemizers may subtract from their income before income tax (but not other kinds of tax, such as payroll tax) is applied. Taxpayers may choose either itemized deduc ...

to 16% ($2,800 max) and minimum standard deduction to $2,100 (joint returns). The general tax credit (max of $35/capita or 2% of $9,000 income) was temporarily extended, and small business tax rates were temporarily lowered through 1977. For the first time in US history, the Tax Reform Act of 1976 established tax incentives designed to encourage the preservation of historic structures – "sixty years after architectural obsolescence had first been officially recognized in the US tax code." The act delayed decreasing in the

investment tax credit A tax credit is a tax incentive which allows certain taxpayers to subtract the amount of the credit they have accrued from the total they owe the state (polity), state. It may also be a credit granted in recognition of taxes already paid or a for ...

through 1980. It expanded the individual minimum tax and increased the long-term capital gains holding period from 6 months to 1 year. A unified rate schedule for estate and gift taxes with a $175,000 exemption was created. The act also created the 501(h) election procedure, allowing 501(c)(3) non-profit organizations to choose to participate in legislative

lobbying Lobbying is a form of advocacy, which lawfully attempts to directly influence legislators or government officials, such as regulatory agency, regulatory agencies or judiciary. Lobbying involves direct, face-to-face contact and is carried out by va ...

limited by the annual financial expenditure on that lobbying, rather than its overall extent. The act also included a provision preventing states from enacting taxes on electricity companies that discriminated on out of state customers. This was relevant to the ongoing court case of Arizona v. New Mexico and ultimately provided the basis for the ruling in Arizona Public Service Co. v. Snead.

Capital Gains

The previous major tax legislation (

Tax Reform Act of 1969 The Tax Reform Act of 1969 () was a United States federal tax law signed by President Richard Nixon oDecember 30, 1969 Its largest impact was creating the Alternative Minimum Tax, which was intended to tax high-income earners who had previously a ...

) had established a 10% minimum tax and while it had left long-term capital gains under $50,000 to continue to qualify for the 25 percent alternative capital gains tax rate, it increased the rate on gains over $50,000 to 29.5 percent in 1970, 32.5 percent in 1971, and 35 percent (one-half the 70 percent top tax rate applicable to ordinary income) in 1972 and later years. This Act increased the minimum tax rate to 15%. The Act also increased the holding period defining long-term

capital gains Capital gain is an economic concept defined as the profit earned on the sale of an asset which has increased in value over the holding period. An asset may include tangible property, a car, a business, or intangible property such as shares. A ca ...

, which receive preferential tax treatment, from six months to one year.

References

External links

Full text of the Act
{{US_tax_acts United States federal taxation legislation 1976 in American law