Alternative Minimum Tax - AMT

Alternative Minimum Tax - AMT

A tax in the United States intended to be levied on very wealthy persons who are eligible for so many deductions that they would otherwise have little or no tax liability. To arrive at the AMT, one adds certain deductions back into a person's adjusted gross income and then subtracts the AMT exemption, which results in the alternative minimum tax income. The taxpayer then pays a percentage of the alternative minimum tax income rather than his/her AGI. The AMT is controversial in the United States because it is not indexed to inflation, meaning that upper middle class families are gradually becoming subject to it, rather than only the very wealthy. See also: Tentative minimum tax, Bracket creep.