Amendment XVI
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.
http://www.law.cornell.edu/constitution/amendmentxvi
2. Sixteenth Amendment. More importantly, in 1909 Congress passed the Sixteenth Amendment, which would do away with the apportionment requirement of the Constitution if enacted. This amendment reads as follows:
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.[11]
By 1913, the required three-fourths of the states ratified the Sixteenth Amendment, thus adding the amendment to the constitution.[12]
Congress almost immediately enacted the Revenue Act of 1913. The tax ranged from 1% on income exceeding $3,000 to 7% on incomes exceeding $500,000. In effect, this statute introduced for the first time the notion of a progressive tax rate structure; the tax rate increases as the base, income in this case, increases.
Subsequently, the U.S. Supreme Court in 1916 upheld the progressive income tax as constitutional in Brushaber v. Union Pacific Railroad Company, 240 U.S. 1 (1916). The Supreme Court indicated that the amendment did not expand the federal government's existing power to tax income (meaning profit or gain from any source) but rather removed the possibility of classifying an income tax as a direct tax on the basis of the source of the income. The Amendment removed the need for the income tax to be apportioned among the states on the basis of population. Income taxes are required, however, to abide by the law of geographical uniformity.
http://en.wikipedia.org/wiki/Legal_history_of_income_tax_in_the_United_States#Modern_income_tax
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