Monday, January 18, 2010

CBO Issue Brief on the Alternative Minimum Tax

The Congressional Budget Office has just published an issue brief on the ATM that discusses the current reach of the tax.

The most recent AMT patch expired at the end of calendar year 2009. Without further adjustments, the impact of the AMT will expand quickly this year and continue to expand in subsequent years, becoming a more significant source of future revenues. As the reach of the AMT grows under current law, many taxpayers will face a fundamentally altered tax structure. If nothing is changed this year, one in six taxpayers will be affected by the AMT, paying on average an additional $3,900 in tax and nearly every married taxpayer with income between $100,000 and $500,000 will owe some alternative tax. Because of the particular tax preferences and exemptions disallowed under the AMT, that tax structure is more likely to affect married couples, large families, and taxpayers in states with high state and local taxes.

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