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1 (June 14, 2006)

handle is hein.crs/crsuntaajjw0001 and id is 1 raw text is: Order Code RS22083 June 14, 2006 CRS Report for Congress Received through the CRS Web Alternative Minimum Taxpayers By State: 2003, 2004, and Projections for 2007 Gregg A. Esenwein Specialist in Public Finance Government and Finance Division Summary Personal exemptions, itemized deductions for state/local taxes, and miscellaneous itemized deductions account for 90% of the preference items that are subject to tax under the alternative minimum tax (AMT) but not subject to tax under the regular income tax. As a result, over certain income ranges, taxpayers who claim itemized deductions for state/local taxes, miscellaneous deductions, or have large families are more likely to fall under the AMT than taxpayers who do not have these characteristics. In 2003, just over 2 million taxpayers were subject to the AMT. By 2004, some 3 million taxpayers were subject to the AMT. New Jersey, New York, Connecticut, the District of Columbia, and California had the highest percentage of taxpayers subject to the AMT. Tennessee, South Dakota, Alaska, Alabama, and Mississippi had the lowest percentage of taxpayers subject to the AMT. By 2007, absent legislative change, some 23 million taxpayers will be subject to the AMT. At that time, whether a married taxpayer has itemized deductions for state/local taxes and/or miscellaneous deductions will become a much less important factor in determining AMT coverage than it is at present. This occurs because, whether they itemize their deductions or not, married taxpayers across a wide range of the income spectrum will be subject to the AMT. This report will be updated as legislative action warrants or as new data become available. The alternative minimum tax for individuals (AMT) was originally enacted to ensure that high-income taxpayers paid a fair share of the federal income tax. However, the lack of indexation of the AMT coupled with the recent reductions in the regular income tax has greatly expanded the potential impact of the AMT. Temporary increases in the AMT exemptions are scheduled to expire at the end of 2006. If this occurs, then the number of taxpayers subject to the AMT will rise from around 3.1 million in 2004 to over 23 million in 2007. Absent legislation, by 2010, some Congressional Research Service + The Library of Congress 1 See CRS Report RL30149, The Alternative Minimum Taxfor Individuals, by Gregg Esenwein.

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