This report provides an overview of interactions between the federal individual income tax system and racial and ethnic disparities in the United States. The tax code may appear to be “race blind” because the Internal Revenue Service does not ask tax filers to report their race or ethnicity. But tax benefits and liabilities depend on factors associated with race and ethnicity, including income, wealth, and various demographic characteristics. Using data from the Tax Policy Center’s microsimulation model, household surveys, and recent studies, we review 12 features of the federal individual income tax system—including tax preferences for capital gains, private businesses, and higher education—and show how each feature mitigates or exacerbates disparities between Black, Latine, and White families, both across and within income groups. We also discuss potential impacts of several alternative policy options for the tax treatment of homeowners, taxpayers filing individually versus jointly as a married couple, and lower-income families with children, and how each reform, to varying degrees based on design, could improve racial equity within the federal individual income tax system.