What is the AMT? Q.What is the AMT? A.The individual alternative minimum tax (AMT) operates alongside the regular income tax. It requires some taxpayers to calculate their liability twice—once under the rules for the regular income tax and once under the AMT rules—and then pay the higher amount. Originally intended to prevent perceived abuses by a handful of the very rich, the AMT affected roughly 5.1 million filers in 2017. The Tax Cuts and Jobs Act dramatically reduced the reach of the AMT, albeit temporarily, so that the tax will hit only 200,000 filers in 2019. Read more about What is the AMT?
How much revenue does the AMT raise? Q.How much revenue does the AMT raise? A.About $4.7 billion in 2019, or 0.3 percent of all individual income tax revenue. That is down significantly from $37.7 billion—2.6 percent of income tax revenue—in 2017, primarily because of the 2017 Tax Cuts and Jobs Act (TCJA). Since most the TCJA individual income tax provisions expire at the end of 2025, AMT revenue will soar to $75.1 billion by 2030, or 2.6 percent of all individual income tax revenue. Read more about How much revenue does the AMT raise?
Who pays the AMT? Q.Who pays the AMT? A.Before the 2017 Tax Cuts and Jobs Act (TCJA), the individual alternative minimum tax (AMT) primarily affected well-off households, but not those with the very highest incomes. It was also more likely to hit taxpayers with large families, those who were married, and those who lived in high-tax states. The TCJA shields almost all upper-middle and high-income taxpayers from the reach of the AMT. The AMT is now most likely to hit those at the top of the income scale who are engaged in certain tax sheltering activities. Read more about Who pays the AMT?
