The alternative minimum tax (AMT) targets high-income taxpayers who are able to use deductions, exemptions, and credits virtually to eliminate their taxable income. The seeming unfairness of high-income taxpayers paying no income tax and middle-income taxpayers paying income tax prompted Congress to enact the alternative minimum tax. The AMT is a parallel tax system to the regular income tax.

The AMT is computed in the same manner as the regular income tax except that certain deductions, exemptions, and credits are not allowed or reduced. The result of taking out deductions and other items is that the alternative minimum tax may be higher than the regular income tax. If so, a taxpayer must pay the alternative minimum tax rather than the regular tax.

The information on this page is not a substitute for professional tax advice.