Taxes are the most important means of revenue collection in the state. The income tax, which is one of the most important and the most lucrative ones, is immediate, adjusted and is charged on the income made by legal persons, the majority regarding pensions and salaries. Taxation has been present in every historical period and has evolved in accordance with the level of social development. In the Republic of Croatia, the income tax first appeared at the end of 1990, and its legally regulated implementation started in 1994. From that date up to now, the law has been subject to many reforms, alterations and amendments, all with the purpose of decreasing the overall tax burden upon the taxpayer and the creation of a more just, stable, efficient and less complex tax system. The major part of the alterations referred to the alterations regarding the height of personal deductions, the increase of tax breaks, the number and height of tax rates, the broadening of tax brackets and the expansion of incomes not subject to taxation.