On this day in history, August 5, 1861... The United States federal government imposed its first personal income tax in an attempt to help pay for its war effort in the American Civil War. It was repealed and replaced by another income tax a year later. The first peacetime income tax came in 1894 through the Wilson-Gorman tariff, which was 2% on income over $4000 (about $111,000.00 in today's money), which meant fewer than 10% of households would pay any. The US Supreme Court ruled the income tax unconstitutional because the Constitution allows only a direct tax by apportionment. In 1913, the Sixteenth Amendment to the United States Constitution made the income tax a permanent fixture in the US tax system.