Without inflation adjustments to key portions of the tax system, individuals would be faced with an erosion of their purchasing power. Beginning in 1985, Congress implemented an indexation procedure to adjust various income tax components, including the tax rate schedules, standard deduction,...

We refine and extend Seetharaman (1994) using tax return level Statistics of Income data that represent the population of 1992 federal individual income tax returns. Our result indicate that while the standard deduction, exemptions, and tax rate schedule continue to contribute the most to...