February 21, 2005

Federal Income Taxes: The Vanishing State & Local Tax Deducation

David Leonhardt:
The culprit is a once-obscure federal tax provision known as the alternative minimum tax, which was created in 1969 to ensure that a relatively small number of wealthy people did not use loopholes to avoid paying taxes.

But it is increasingly being applied to families with incomes of $75,000 to $250,000 a year who claim relatively high deductions - like the ones for property taxes, state and local income taxes - and the exemption for children. When it does apply, it cancels some of those deductions..

The impact is about to mushroom. Barring a change in the law, almost 19 million taxpayers will be subject next year to the alternative minimum tax, or A.M.T., up from roughly 3.4 million this year and 1.3 million in 2000, according to the Tax Policy Center, a Washington research group whose calculations on this issue are widely accepted.
The non-indexing of the Alternative Minimum Tax will cause more problems over the next few years for Wisconsin residents. Posted by James Zellmer at February 21, 2005 7:58 AM | Subscribe to this site via RSS:
Posted to Politics | Taxes