How Often, And How, Do IRS Tax Rates Change?

The IRS tax rate changes as frequently as Congress may decide to make changes. The last major change to the U.S. tax rates came about through the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA).  The law reduced tax rates for both individuals and businesses. It also reduced the estate tax, eliminating it altogether in the year 2010 and bringing it back years later.

IRS Interpretation of Congressional Action

The IRS, based on congressional action, issues rules and regulations to interpret the actions of Congress. From time to time, temporary changes are made to allow for special credits or deductions for taxpayers. This often happens in the wake of some tragedy or other need for economic relief. An example of this is the Katrina Emergency Tax Relief Act of 2005 (KETRA). KETRA allowed for charitable contributions to be 100 percent deductible if made to provide relief to survivor’s of Hurricane Katrina.

Communication of Tax Rate Changes

When changes are made to the tax rate, the IRS publishes a bulletin to announce the changes to the rate. These changes are also reflected in tax preparation software and incorporated in the calculation of a taxpayer’s tax obligation.

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