Tax Rate Reduction Act of 1981

Tax Rate Reduction Act of 1981 - Title I: Individual Tax Rates - Amends the Internal Revenue Code to reduce individual income tax rates for calendar years 1982 through 1986 and permanently thereafter.

Title II: Inflation Adjustments for Taxable Years Beginning After 1986 - Requires annual cost of living adjustments to income levels in each income tax bracket, beginning in calendar year 1986. Requires similar cost of living adjustments to the $1,000 personal tax exemption. Increases the minimum income levels at which a taxpayer is required to file an income tax return by providing that such levels shall be equal to the taxpayer's income tax exemption and zero bracket amount, adjusted for inflation.