The Tax Foundation

Tax Legislation

Alternative Minimum Tax (AMT) Reform

The alternative minimum tax (AMT) was enacted in 1969 to ensure that a small number of wealthy individuals would no longer be able to take advantage of so many deductions and credits that they could avoid paying taxes altogether. Instead of repealing some of the deductions, Congress chose to create a new, parallel income tax system. Taxpayers were then required to determine what they owed under both the regular tax system and the alternative minimum tax system, and then pay whichever tax bill was higher.

Because Congress failed to account for growing inflation, more and more Americans are finding that they are required to pay the AMT. By 2008, these AMT payers will outnumber those who pay under the standard tax system.

To mitigate this problem, Congress passes legislation each year to increase the income levels above which taxpayers must pay the AMT. However, many Congressional leaders have expressed an interest in a more permanent resolution to the increasing participation in the AMT system. This desire has been tempered, to a degree, by the new PAYGO rules, which require lawmakers to offset tax cuts with tax increases in other areas. Any significant AMT reform is expected to be an expensive proposition at best.

Below is a list (updated weekly) of AMT-related bills thus far in Congress. To view more information on these bills, please visit the THOMAS legislative information site maintained by the Library of Congress. Those bills that are in bold have been acted upon by the House, Senate or both.

House Bills

HR 1112: A bill to amend the Internal Revenue Code of 1986 to provide individuals relief from the alternative minimum tax.
HR 1365: A bill to amend the Internal Revenue Code of 1986 to repeal the alternative minimum tax on corporations.
HR 1366:  A bill to amend the Internal Revenue Code of 1986 to repeal the alternative minimum tax on individuals.

Senate Bills

S 55: A bill to amend the Internal Revenue Code of 1986 to repeal the individual alternative minimum tax.
S 102: A bill to amend the Internal Revenue Code of 1986 to extend and expand relief from the alternative minimum tax and to repeal the extension of the lower rates for capital gains and dividends for 2009 and 2010.
S 734: A bill to amend the Internal Revenue Code of 1986 to reduce the rate of the tentative minimum tax for noncorporate taxpayers to 24 percent.

For more information on the number of AMT filers and average payments by Congressional district, please click here.

For more Tax Foundation research on the AMT, please see below.

Research from the Tax Foundation