Tax Topic

Alternative Minimum Tax (AMT)

The AMT was created back in 1969 in an effort to make sure the wealthy, who often had many deductions not available to the usual taxpayer, always paid some tax. The AMT is calculated differently than the income tax and disallows (or limits) some deductions, usually referred to as "tax preference items." There is also an "AMT exemption amount" meant to keep the not-so-wealthy from paying AMT.

Because the Tax Cuts and Jobs Act eliminated certain itemized deductions, limited deductions for state and local taxes, and significantly increased the income level at which the AMT exemption phases out, fewer taxpayers will be subject to AMT.

For 2022, the AMT exemption is: Joint, $118,100; Single, $75,900, but the AMT exemption phases out to zero along an income range of Joint, $1,079,800 to $1,552,200; and Single, $539,900 to $843,500.

The IRS web site offers a lot of detail about the AMT: http://www.irs.gov/taxtopics/tc556.html


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