Order Code RS22083
Updated October 17, 2007
Alternative Minimum Taxpayers By State:
2003, 2004, and Projections for 2007
Gregg A. Esenwein
Specialist in Public Finance
Government and Finance Division
Steven Maguire
Analyst in Public Finance
Government and Finance Division
Summary
Personal exemptions, itemized deductions for state/local taxes, and miscellaneous
itemized deductions account for 96% 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 2004, 3.1 million taxpayers were subject to the AMT. By 2005, some 4.1
million taxpayers were subject to the AMT. New Jersey, New York, Connecticut, the
District of Columbia, and Maryland had the highest percentage of taxpayers subject to
the AMT. South Dakota, Mississippi, Tennessee, Alaska, and Alabama had the lowest
percentage of taxpayers subject to the AMT.
By 2007, absent legislative change, according to the Joint Committee on Taxation,
some 22.2 million taxpayers will be subject to the AMT. At that time, whether a
married taxpayer has itemized deductions for state/local taxes or miscellaneous
deductions will become a much less important factor than it is at present in determining
AMT coverage. 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The alternative minimum tax for individuals (AMT) was originally enacted to ensure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

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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 expired at the end of 2006. If
legislative changes do not extend the expired changes, then the number of taxpayers
subject to the AMT will rise from around 4.1 million in 2006 to 22.2 million in 2007.
Further, by 2010, some 29 million taxpayers will be subject to the AMT.2 Taxpayers with
incomes in the $100,000 to $500,000 income range will be the hardest hit: 88% of these
taxpayers will be subject to the AMT in 2010.
Itemized deductions for state/local taxes (62.7%), personal exemptions (22.4%), and
miscellaneous itemized deductions (11.4%) together account for 96% of the preference
items that are subject to tax under the AMT but not subject to tax under the regular
income tax.3 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.
Table 1 and Table 2 show for 2004 and 2005, respectively, the percentage of
taxpayers in each state that were subject to the AMT. Of all the states, South Dakota,
Mississippi, Tennessee, Alaska, and Alabama had the smallest percentage of taxpayers
subject to the AMT. In these five states, 1% of taxpayers were on the AMT in 2005.
These are states in which either many taxpayers have relatively low incomes, 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.4
On the other hand, New Jersey, New York, Connecticut, the District of Columbia,
and Maryland were the states with the largest percentage of taxpayers subject to the AMT.
For instance, in New Jersey, about 56 out of every 1,000 taxpayers fell under the AMT
in 2004. By 2005, about 68 taxpayers out of every 1,000 paid the AMT. 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
1 See CRS Report RL30149, The Alternative Minimum Tax for Individuals, by Gregg Esenwein
and Steven Maguire.
2 U.S. Congress, Joint Committee on Taxation, “Present Law and Background Relating to the
Alternative Minimum Tax,” JCX-38-07, June 25, 2007.
3 JCT, June 25, 2007, p. 18.
4 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.

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spectrum all married taxpayers will be subject to the AMT whether they itemize their
deductions or not.
The potentially expanding impact of the AMT has been mitigated through temporary
increases in the basic exemption for the AMT and temporary changes that allow taxpayers
to use nonrefundable personal tax credits to reduce their AMT liabilities. The most recent
increase in the basic AMT exemption occurred in May 2006 with the enactment of the
Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA, P.L. 109-222). Under
provisions of this act, the AMT exemption for 2006 was set at $62,550 for joint returns
and $42,500 for unmarried taxpayers. In addition, this act allows taxpayers to temporarily
use nonrefundable tax credits to offset AMT liability. The Joint Committee on Taxation
estimates that these two changes will reduce federal revenues by almost $34 billion. In
2007, the basic AMT exemption is scheduled to decrease to its prior law level of $45,000
for joint returns ($35,750 for unmarried taxpayers), and nonrefundable tax credits will not
be allowed to offset AMT liability.
Because the temporary patches to the AMT expired at the end of 2006, in 2007
almost 18 million more taxpayers will be subject to the AMT than was the case in 2005.5
An increase of this magnitude will affect taxpayers in every state, regardless of whether
taxpayers in that state itemize and deduct their state/local taxes and/or miscellaneous
deductions from their federal tax returns.
For example, in 2005, 25,415 taxpayers in Tennessee were subject to the AMT.
Thus, Tennessee taxpayers accounted for only 0.62% of the total AMT returns filed in the
United States that year. However, if that percentage remains constant, and the temporary
patches to the AMT expire, then by 2007 up to 138,609 (0.62% times 22.184 million)
taxpayers in Tennessee could be subject to the AMT.
Table 3 shows the potential number of AMT returns by state in 2007 if the
temporary patches to the AMT are allowed to expire. Two estimates are provided in
Table 3. The CRS calculations are an extrapolation based on the assumption that the
ratio of AMT taxpayers in each state to total AMT taxpayers in the entire country will
remain the same in 2007 as it was in 2005. In contrast, the Citizens for Tax Justice (CTJ)
use a microsimulation model to predict how many taxpayers in each state would be
subject to the AMT.6 Both methodologies make assumptions that could be challenged,
but both still provide reasonable estimates of the potential impact of the AMT in 2007
absent legislative changes.
5 JCT, June 25, 2007.
6 Citizens for Tax Justice, “Who Pays the Individual AMT: State-by-State Estimates for 2006,”
March 22, 2006.

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Table 1. Number of Alternative Minimum Taxpayers by State Tax Year 2004
(Returns in thousands)
Number of
AMT returns as
Number of
AMT
AMT returns as
Rank
State
AMT returns
Rank
State
returns
% of total
returns
returns
% of total
U.S.A.
133,092
3,146
2.36%
46
Alabama
1,910
14
0.73%
30
Montana
439
6
1.37%
50
Alaska
345
2
0.58%
20
Nebraska
808
13
1.61%
35
Arizona
2,372
30
1.26%
38
Nevada
1,092
13
1.19%
37
Arkansas
1,136
12
1.06%
21
New Hampshire
643
11
1.71%
4
California
15,327
606
3.95%
1
New Jersey
4,107
228
5.55%
31
Colorado
2,110
32
1.52%
39
New Mexico
827
8
0.97%
3
Connecticut
1,665
80
4.80%
2
New York
8,625
437
5.07%
24
Delaware
395
6
1.52%
14
North Carolina
3,769
69
1.83%
5
District of Columbia
277
11
3.97%
48
North Dakota
305
2
0.66%
26
Florida
8,173
118
1.44%
12
Ohio
5,447
120
2.20%
13
Georgia
3,782
73
1.93%
41
Oklahoma
1,476
16
1.08%
23
Hawaii
606
9
1.49%
10
Oregon
1,604
37
2.31%
29
Idaho
594
8
1.35%
16
Pennsylvania
5,811
114
1.96%
15
Illinois
5,762
112
1.94%
8
Rhode Island
500
13
2.60%
43
Indiana
2,854
29
1.02%
25
South Carolina
1,844
26
1.41%
36
Iowa
1,334
17
1.27%
51
South Dakota
362
2
0.55%
22
Kansas
1,229
19
1.55%
49
Tennessee
2,606
17
0.65%
32
Kentucky
1,757
23
1.31%
33
Texas
9,431
118
1.25%
42
Louisiana
1,869
18
0.96%
28
Utah
996
13
1.31%
19
Maine
618
11
1.78%
18
Vermont
306
5
1.63%
6
Maryland
2,635
102
3.87%
9
Virginia
3,491
89
2.55%
7
Massachusetts
3,061
116
3.79%
40
Washington
2,860
35
1.22%
27
Michigan
4,561
69
1.51%
44
West Virginia
747
6
0.80%
11
Minnesota
2,407
57
2.37%
17
Wisconsin
2,621
51
1.95%
47
Mississippi
1,165
7
0.60%
45
Wyoming
243
2
0.82%
34
Missouri
2,585
34
1.32%
Source: Department of the Treasury. Internal Revenue Service.

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Table 2. Number of Alternative Minimum Taxpayers by State Tax Year 2005
(Returns in thousands)
Number of
AMT returns as
Number of
AMT
AMT returns as
Rank
State
AMT returns
Rank
State
returns
% of total
returns
returns
% of total
U.S.A.
135,258
4,068
3.01%
47
Alabama
1,956
21
1.07%
32
Montana
448
8
1.79%
48
Alaska
347
3
0.86%
25
Nebraska
816
17
2.08%
27
Arizona
2,474
49
1.98%
38
Nevada
1,150
18
1.57%
39
Arkansas
1,154
17
1.47%
20
New Hampshire
650
15
2.31%
6
California
15,573
757
4.86%
1
New Jersey
4,153
283
6.81%
23
Colorado
2,160
46
2.13%
42
New Mexico
843
11
1.30%
3
Connecticut
1,682
99
5.89%
2
New York
8,716
523
6.00%
21
Delaware
403
9
2.23%
18
North Carolina
3,880
93
2.40%
4
District of Columbia
282
15
5.32%
46
North Dakota
307
3
0.98%
28
Florida
8,411
161
1.91%
12
Ohio
5,460
152
2.78%
15
Georgia
3,918
102
2.60%
40
Oklahoma
1,496
21
1.40%
22
Hawaii
621
14
2.25%
11
Oregon
1,645
48
2.92%
30
Idaho
614
12
1.95%
14
Pennsylvania
5,867
154
2.62%
13
Illinois
5,836
153
2.62%
9
Rhode Island
502
17
3.39%
41
Indiana
2,884
41
1.42%
31
South Carolina
1,885
35
1.86%
37
Iowa
1,347
22
1.63%
51
South Dakota
367
3
0.82%
24
Kansas
1,242
26
2.09%
49
Tennessee
2,658
25
0.94%
35
Kentucky
1,780
31
1.74%
34
Texas
9,728
172
1.77%
43
Louisiana
1,770
22
1.24%
29
Utah
1,031
19
1.84%
19
Maine
621
15
2.42%
16
Vermont
310
8
2.58%
5
Maryland
2,674
134
5.01%
8
Virginia
3,541
124
3.50%
7
Massachusetts
3,083
146
4.74%
36
Washington
2,932
50
1.71%
26
Michigan
4,563
93
2.04%
45
West Virginia
754
9
1.19%
10
Minnesota
2,446
74
3.03%
17
Wisconsin
2,656
65
2.45%
50
Mississippi
1,170
11
0.94%
44
Wyoming
248
3
1.21%
33
Missouri
2,611
47
1.80%
Source: Department of the Treasury. Internal Revenue Service.

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Table 3. Potential AMT Returns by State in 2007
(Returns in thousands)
Potential AMT
Potential AMT
Potential AMT
Potential AMT
AMT returns in
AMT returns in
State
returns in 2007
returns in 2007
State
returns in 2007
returns in 2007
2005
2005
(CRS)
(CTJ)
(CRS)
(CTJ)
U.S.A.
4,068
22,184
22,493
Alabama
21
112
248 Montana
8
44
51
Alaska
3
18
54 Nebraska
17
92
110
Arizona
49
266
335 Nevada
18
99
146
Arkansas
17
91
136 New Hampshire
15
83
113
California
757
4,129
3,104 New Jersey
283
1,544
1,069
Colorado
46
251
348 New Mexico
11
62
96
Connecticut
99
541
428 New York
523
2,850
1,689
Delaware
9
50
62 North Carolina
93
509
598
District of Columbia
15
80
49 North Dakota
3
18
38
Florida
161
880
1,052 Ohio
152
827
854
Georgia
102
556
615 Oklahoma
21
117
175
Hawaii
14
74
97 Oregon
48
264
255
Idaho
12
63
89 Pennsylvania
154
837
1,059
Illinois
153
836
993 Rhode Island
17
91
88
Indiana
41
223
419 South Carolina
35
193
268
Iowa
22
121
192 South Dakota
3
17
42
Kansas
26
140
191 Tennessee
25
139
334
Kentucky
31
168
243 Texas
172
936
1,401
Louisiana
22
122
178 Utah
19
106
150
Maine
15
80
82 Vermont
8
43
48
Maryland
134
732
681 Virginia
124
674
682
Massachusetts
146
796
751 Washington
50
273
451
Michigan
93
505
830 West Virginia
9
47
86
Minnesota
74
406
479 Wisconsin
65
353
502
Mississippi
11
60
107 Wyoming
3
17
33
Missouri
47
256
392
Source: Calculations by CRS assuming that the ratio of AMT taxpayers in each state to total AMT taxpayers in the entire country will remain the same in 2007 as it was in 2005. The
Citizens for Tax Justice (CTJ) estimates are from Citizens for Tax Justice, “Who Pays the Individual AMT: State-by-State Estimates for 2006,” March 22, 2006. Projected Number
of AMT taxpayers in the U.S. in 2007 are CRS calculations based on data from the Joint Committee on Taxation.

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