The Alternative Minimum Tax for Individuals: In Brief

Summary

Suppress for publication

In addition to raising revenue, the individual income tax has been used as a vehicle to promote various social and economic goals. This has been accomplished by according preferential tax treatment to certain items of income and expense. The net result, however, has been an erosion of the individual income tax base. By utilizing the preferences and incentives in the tax code, some individuals can substantially reduce their income taxes.

To make sure that everyone paid at least some taxes and still preserve the economic and social incentives in the tax code, Congress, in 1969, enacted the predecessor to the current individual alternative minimum tax (AMT). Since then, the federal individual income tax has consisted of two parallel tax systems—the regular income tax and the AMT. Since its inception, the value and effectiveness of the minimum tax has been the subject of congressional debate, and it has been modified numerous times.

This report provides a brief history and overview of the alternative minimum tax for individuals (AMT). While the AMT is not the subject of current legislative activity, that may change if efforts to reform the tax code move forward. The report will be updated as legislative action warrants.