Tax Reform Act of 1986
- A law that updated federal tax legislation, culminating in the creation of the Internal Revenue Code of 1986. Its objective was to create a more equitable tax environment by closing tax breaks for high-income earners and lowering the top rates for both enterprises and individuals. It aimed to offset the reduced rates by strengthening restrictions on write-offs for corporate capital spending and doing away with the investment tax credit, leading to an anticipated increase in corporate taxes. This law also made unemployment benefits taxable and exempted over four million individuals with low income from tax obligations. Prior tax reforms occurred in 1976, 1981, and 1984, introducing changes that included childcare provisions, new capital gains and loss rules, tax breaks for select benefits, stricter charity donation deduction guidelines, and tax incentives for exporters. The 1986 Act made significant alterations to federal tax regulations
- The Tax Reform Act of 1986 was a major overhaul of the Internal Revenue Code, aiming to level the playing field for taxpayers.
- Many tax deductions ended with the introduction of the Tax Reform Act of 1986.
- Under the Tax Reform Act of 1986, millions of low-income individuals were removed from the tax rolls.