TheUnited StatesRevenue Act of 1978,Pub. L. 95–600, 92 Stat. 2763, enactedNovember 6, 1978, amended theInternal Revenue Code by reducing individualincome taxes (wideningtax brackets and reducing the number of tax rates), increasing the personal exemption from $750 to $1,000, reducingcorporate tax rates (the top rate falling from 48 percent to 46 percent), increasing the standard deduction from $3,200 to $3,400 (joint returns), increasing the capital gains exclusion from 50 percent to 60 percent (effectively reducing the rate of taxation on realized capital gains to 28%), and repealing the non-business exemption for state and localgasoline taxes.
The Act was passed by the95th Congress and was signed into law byPresidentJimmy Carter on November 6, 1978.
The Act also establishedFlexible spending accounts, which allow employees to receive reimbursement for medical expenses from untaxed income dollars. The Act added section401(k) to the Internal Revenue Code.[1] This latter provision, intended to limit executive compensation, was later used to develop one of the primary tax-advantaged retirement savings vehicles in use in the United States.
