Tax Reform Act of 1986
The Congress of the USA passed the Tax Reform Act (TRA) of 1986 to reduce tax rates, broaden the tax base and eliminate many tax shelters and other preferences. The top tax rate was lowered to 28%. As a result, capital gains faced the same tax rate as ordinary income. Moreover, interest on consumer loans and state and local sales taxes was no longer deductible. The law increased the personal exemption and standard deduction.
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