Which taxpayers get ensnared by the Alternative Minimum Tax? Turns out nearly 4 million taxpayers must pay this wildly unpopular tax that four of the remaining presidential candidates (except for Hillary Clinton) have pledged to eliminate.
In 2013, 62.5% of households with income between $200,000 and $500,000 were subject to the AMT, the highest rate out of any income group, according to the Tax Foundation. Among households bringing in between $100,000 and $200,000, only 3.8% fell under the tax.
The AMT was created in the 1960s as a way to keep wealthy taxpayers from using loopholes to avoid paying taxes, but because it was not automatically updated for inflation, it ended up hitting more middle-class taxpayers.
Congress was forced to “patch” the AMT by raising the exemption amount to prevent middle-class taxpayers from being hit by the tax.
On Jan. 2, 2013, the American Taxpayer Relief Act of 2012 indexed the income thresholds to inflation, preventing the need for an annual “patch.”
The AMT exemption amount for 2016 is $53,900 for singles and $83,800 for married couples filing jointly.