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Long title | An Act to reform the internal revenue laws of the United States. |
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Acronyms (colloquial) | TRA |
Nicknames | Tax Reform Act of 1985 |
Enacted by | the 99th United States Congress |
Effective | October 22, 1986 |
Citations | |
Public law | 99-514 |
Statutes at Large | 100 Stat. 2085 |
Codification | |
Titles amended | 26 U.S.C.: Internal Revenue Code |
U.S.C. sections amended | 26 U.S.C. § 1 et seq. |
Legislative history | |
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The Tax Reform Act of 1986 (TRA) was passed by the 99th United States Congress and signed into law by President Ronald Reagan on October 22, 1986.
The Tax Reform Act of 1986 was the top domestic priority of President Reagan's second term. The act lowered federal income tax rates, decreasing the number of tax brackets and reducing the top tax rate from 50 percent to 28 percent. The act also expanded the earned income tax credit, the standard deduction, and the personal exemption, removing approximately six million lower-income Americans from the tax base. Offsetting these cuts, the act increased the alternative minimum tax and eliminated many tax deductions, including deductions for rental housing, individual retirement accounts, and depreciation.
Although the tax reform was projected to be revenue-neutral, it was popularly referred to as the second round of Reagan tax cuts (following the Economic Recovery Tax Act of 1981). The bill passed with majority support in both the House of Representatives and the Senate, receiving the votes of majorities among both congressional Republicans and Democrats, including Democratic Speaker of the House Tip O'Neill.
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