Also see AMT Quick Facts

• The AMT operates parallel to the regular tax and sets a floor on total tax liability. Taxpayers whose income exceeds the AMT exemption must calculate both regular tax and AMT liabilities and pay the larger amount.
  Basic Information on the AMT: The Individual Alternative Minimum Tax (AMT): 12 Key Facts and Projections
• First enacted in 1969 to prevent excessive tax sheltering by high-income taxpayers, the AMT has changed form several times and become a tax affecting many upper-middle income taxpayers.
  Source: Historical AMT Legislation.
• The number of taxpayers owing the AMT grew from about 20,000 in 1970 to roughly four million in 2011.  Unless Congress acts, more than 31 million taxpayers will pay the AMT in 2012.
  Source: Aggregate AMT Projections 2011-2022.

  
  Underlying data: download

• The sharp increase in the number of taxpayers who owe the AMT has had two main causes: 1) Unlike the regular income tax, the AMT is not indexed for inflation and has thus increased faster than the regular tax.
  2) The 2001-2006 tax cuts reduced regular tax liability without corresponding adjustment of AMT liability (other than a temporary fix which has been extended several times).
  Source: What Is Responsible for the Growth of the AMT?.
• The AMT, which originally targeted high-income taxpayers, requires annual legislation to prevent it from affecting millions of middle-income individuals each year. This paper describes the AMT and provides TPC's latest estimates of AMT coverage, revenue, and distribution.
  The Individual Alternative Minimum Tax: Historical Data and Projections, Updated October 2009
• Congress has held down the number of taxpayers on the AMT by temporarily raising the AMT exemption each year since 2001. The cost of such patches—$37 billion for 2010 and 2011—rises every year because the AMT is not indexed for inflation.
  Source: JCT Cost Estimates for 2010-2011 Patch
• Option: repeal the AMT and impose a 4% surtax on the adjusted gross income of high-income taxpayers.
  Source:  A Simple Progressive Replacement for the AMT
• Option: reform the current income tax system based on AMT rules.
  Source: Suppose They Took the AM Out of AMT
• More AMT Options

Underlying data: download

• The main cause of AMT liability is loss of typical reductions in taxable income, most commonly dependent exemptions and deductions for state and local taxes and for medical expenses.
  Source: Suppose They Took the AM Out of the AMT?.
• Repealing the AMT would reduce revenues by over $1.3 trillion between 2011 and 2022 if the Bush tax cuts are not extended and by over $2.7 trillion if they are.
  Sources: Aggregate AMT Projections 2011-2022

Further Reading

Burman, Leonard E., William G. Gale, and Jeff Rohaly. 2005. The Expanding Reach of the Individual Alternative Minimum Tax. (May).

Burman, Leonard E., David Weiner. 2005. Suppose They Took the AM Out of AMT? (August).

See posts about the AMT on TaxVox, TPC's blog

See all publications related to the AMT

See all estimates related to the AMT

See all tax facts (background data) related to the AMT