The Alternative Minimum Tax (AMT) is a parallel tax system in the United States designed to ensure that high-income taxpayers pay a minimum amount of taxes. The AMT was enacted in 1969 to address concerns that some wealthy individuals were using deductions and tax credits to avoid paying any income tax.
The AMT is calculated by adding back certain deductions and credits to a taxpayer’s regular taxable income. This can result in a higher tax bill for some taxpayers, especially those who itemize their deductions or have high levels of certain types of income, such as capital gains or private activity bonds.