The Economic Recovery Tax Act of 1981 (ERTA), or Kemp–Roth Tax Cut, was an Act that introduced a major tax cut, which was designed to encourage economic growth. The Act was enacted by the 97th Congress and signed into law by U.S. President Ronald Reagan. The Accelerated Cost Recovery System (ACRS) was a major component of the Act, and was amended in 1986 to become the Modified Accelerated Cost Recovery System (MACRS).
Representative Jack Kemp and Senator William Roth, both Republicans, had nearly won passage of a tax cut during the Carter presidency; however, President Jimmy Carter feared an increase in the deficit and so prevented the bill's passage. Reagan made a major tax cut his top priority once he had taken office. Although Democrats maintained a majority in the U.S. House of Representatives during the 97th Congress, Reagan received support from conservative Democrats like Phil Gramm to pass the bill. The Act passed the U.S. Congress on August 4, 1981, and it was signed into law by Reagan on August 13, 1981. It was one of the largest tax cuts in U.S. history, and ERTA and the Tax Reform Act of 1986 are known together as the Reagan tax cuts. Along with spending cuts, Reagan's tax cuts were the centerpiece of what some contemporaries described as the conservative "Reagan Revolution".