When the federal government indexed the personal income tax system in 1985, a taxpayer could be pushed into a higher tax bracket only if her real income increased.

Question

Quizplus · Accepted Answer

Indexing the personal income tax system to inflation means that adjustments are made so that taxpayers are not pushed into higher tax brackets simply due to inflation. This ensures that only increases in real income, which is income adjusted for inflation, can result in moving to a higher tax bracket.

When the Federal Government Indexed the Personal Income Tax System