Order Code RS22083
March 17, 2005
CRS Report for Congress
Received through the CRS Web
Alternative Minimum Taxpayers By State
Gregg 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, and/or have large families
are more likely to fall under the AMT than taxpayers who do not have these
characteristics.
In 2003, 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.
It should be noted that absent legislative change, whether a married taxpayer has
itemized deductions for state/local taxes and/or miscellaneous deductions will become
a less important factor in determining AMT coverage. This will result because, if the
AMT is not modified, then across a broad range of the income spectrum all married
taxpayers will be subject to the AMT whether they itemize their deductions or not.
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The alternative minimum tax for individuals (AMT) was originally enacted to ensure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.1
Temporary increases in the AMT exemptions are scheduled to expire at the end of
2005. If this occurs, then the number of taxpayers subject to the AMT will rise from
around 2.3 million in 2003 to over 19 million in 2006. Absent legislation, by 2010, some
31million taxpayers will be subject to the AMT. Taxpayers with incomes in the $100,000
1 See CRS Report RL30149, The Alternative Minimum Tax for Individuals, by Gregg Esenwein.
Congressional Research Service ˜ The Library of Congress

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CRS-2
to $500,000 income range will be the hardest hit: 90% of these taxpayers will be subject
to the AMT in 2010.
Personal exemptions (22%), itemized deductions for state/local taxes (48%), and
miscellaneous itemized deductions (20%) together account for over 90% of the preference
items that are subject to tax under the 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, and/or have large families are
more likely to fall under the AMT than taxpayers who do not have these characteristics.
The following table shows for 2003 the percentage of taxpayers in each state that
were subject to the AMT. Of all the states, Tennessee, South Dakota, Alaska, Alabama,
and Mississippi had the smallest percentage of taxpayers subject to the AMT. In these
five states, only four to five out of every 1,000 taxpayers paid the AMT in 2003. These
are states where either many taxpayers have relatively low incomes and/or state/local
taxes that are deductible from the federal income tax are relatively low. As a result of the
combination of these factors, taxpayers in these states tend not to itemize their deductions
and hence, are less likely to be subject to the AMT than taxpayers in other states.2
On the other hand, New Jersey, New York, Connecticut, the District of Columbia,
and California were the states with the largest percentage of taxpayers subject to the
AMT. For instance, in New Jersey, about 43 out of every 1,000 taxpayers fell under the
AMT in 2003. In these states, many taxpayers have relatively high incomes and the
state/local tax burden is also relatively high. The combination of these factors produces
a larger number of itemizers and, consequently, a larger percentage of taxpayers being
pushed into the AMT.

It should be noted that absent legislative change, whether a married taxpayer has
itemized deductions for state/local taxes and/or miscellaneous deductions will become
a less important factor in determining whether taxpayers are subject to the AMT. This
will result because, if the AMT is not modified, then across a broad range of the income
spectrum all married taxpayers will be subject to the AMT whether they itemize their
deductions or not.
For example, if the AMT is not changed, then in 2006, all married taxpayers filing
joint returns with two children will be subject to the AMT when their incomes exceed
$67,500. It would not matter whether they itemized deductions or took the standard
deduction; they would pay the AMT. The income entry point for the AMT gets smaller
as family size increases. For instance, in 2006, all married couples with four children
whose incomes exceed $58,500 will be subject to the AMT rather than the regular income
tax regardless of whether they itemize or take the standard deduction.3
2 This relationship might change given the recent enactment of a temporary provision allowing
itemized deductions for state/local sales taxes in lieu of income taxes. See CRS Report RL32781,
Federal Deductibility of State and Local Taxes, by Steven Maguire.
3 See CRS Report RS21817, The Alternative Minimum Tax (AMT): Income Entry Points and
“Take Back” Effects, by Gregg Esenwein.

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CRS-3
Number of Alternative Minimum Taxpayers by State
Tax Year 2003
(Returns in thousands)
Number of
AMT
AMT returns as
Number of
AMT
AMT returns
Rank
State
Rank
State
Returns
Returns
% of total
Returns
Returns
as % of total
U.S.A.
131,357
2,359
1.80%
48
Alabama
1,884
10
0.52
30
Montana
434
5
1.04%
49
Alaska
343
2
0.49
21
Nebraska
803
10
1.26
35
Arizona
2,285
20
0.90
39
Nevada
1,044
8
0.79
38
Arkansas
1,122
9
0.79
20
New Hampshire
635
8
1.28
5
California
15,172
475
3.13
1
New Jersey
4,082
179
4.38
26
Colorado
2,079
23
1.11
36
New Mexico
814
7
0.87
3
Connecticut
1,654
61
3.68
2
New York
8,590
357
4.15
23
Delaware
388
5
1.18
17
North Carolina
3,681
53
1.45
4
D.C.
276
9
3.27
46
North Dakota
302
2
0.56
34
Florida
7,850
72
0.91
12
Ohio
5,444
97
1.78
16
Georgia
3,709
54
1.45
37
Oklahoma
1,461
12
0.84
25
Hawaii
591
7
1.11
10
Oregon
1,572
29
1.85
28
Idaho
578
6
1.07
19
Pennsylvania
5,772
79
1.37
18
Illinois
5,723
81
1.41
8
Rhode Island
498
11
2.13
41
Indiana
2,817
20
0.71
27
South Carolina
1,805
20
1.08
33
Iowa
1,325
13
0.95
50
South Dakota
357
2
0.43
22
Kansas
1,219
15
1.19
51
Tennessee
2,565
11
0.42
29
Kentucky
1,741
18
1.06
40
Texas
9,299
69
0.74
42
Louisiana
1,880
13
0.69
31
Utah
970
10
1.03
15
Maine
615
9
1.52
13
Vermont
302
5
1.61
7
Maryland
2,602
75
2.90
11
Virginia
3,432
61
1.79
6
Massachusetts
3,052
89
2.92
43
Washington
2,809
18
0.65
24
Michigan
4,546
52
1.14
45
West Virginia
744
5
0.62
9
Minnesota
2,384
46
1.92
14
Wisconsin
2,590
41
1.57
47
Mississippi
1,170
6
0.53
44
Wyoming
241
2
0.63
32
Missouri
2,564
26
1.02
Source: Department of the Treasury. Internal Revenue Service. [http://www.irs.ustreas.gov/taxstats/article/0,,id=103106,00.html].

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