Federal Reserve Act

About Federal Reserve Act

The Federal Reserve Act of 1913 created the central banking system of the United States. While not a tax law directly, the Act had profound implications for taxation. The Federal Reserve manages interest rates and the money supply, which affect government borrowing costs and tax revenue. The Fed also processes federal tax payments and manages the Treasury tax and loan accounts. The Revenue Act of 1913, passed the same year, established the modern income tax. Together, these two 1913 laws created the modern fiscal and monetary framework of the United States. The Fed and the income tax have been intertwined ever since, as monetary policy affects tax revenue and tax policy affects economic growth.