March 19, 2006

AMT: Without a Fix, A Time Bomb

Avram Lank updates us on the latest Washington machinations over the Alternative Minimum Tax:
Inflation is the basic reason the AMT is spreading.

Many parts of the tax code are indexed for inflation, including brackets and personal exemptions. However, the AMT exemption is not. So over the years, as everyday people had larger, inflation-driven exemptions under the regular tax code, the gap narrowed between what they owed under it vs. what they owed under the AMT.

Congress addressed the narrowing gap by temporarily raising the AMT exemption in 2001 and 2003. But the last temporary fix expired in 2005, so many more people will feel its sting this year.
Posted by James Zellmer at March 19, 2006 7:36 AM | Subscribe to this site via RSS:
Posted to Taxes