Order Code RS22909
July 1, 2008
The Alternative Minimum Tax for Individuals:
Legislative Activity in the 110th Congress
Steven Maguire
Specialist in Public Finance
Government and Finance Division
Jennifer Teefy
Information Research Specialist
Knowledge Services Group
Summary
The alternative minimum tax (AMT) for individuals was originally enacted to
ensure that all taxpayers, especially high-income taxpayers, pay at least a minimum
amount of federal taxes. However, the AMT is not indexed for inflation, and this factor,
combined with recent reductions in the regular income tax, has greatly expanded the
potential impact of the AMT. Temporary provisions intended to mitigate the effects of
the AMT expired at the end of 2006, and Congress worked throughout 2007 to enact an
AMT “patch.” The patch for the 2007 tax year, as provided for in the Tax Increase
Prevention Act of 2007 (P.L. 110-166), enacted on December 26, 2007, set the AMT
exemption levels for 2007 at $66,250 for joint filers and $44,350 for single filers.
The AMT exemption amounts for the 2008 tax year revert to $45,000 for joint
filers and $33,750 for single filers. Without a patch, roughly 26 million taxpayers will
be affected by the AMT in 2008. The FY2009 budget compromise, S.Con.Res. 70,
includes an offset AMT patch. On April 17, 2008, the Senate Finance Committee
released legislation, S. 2886, that would extend the AMT patch through 2008 and allow
the use of nonrefundable personal credits against AMT liability. S. 2886 does not
include offsets. More recently, Senator Baucus unveiled a substitute amendment to H.R.
6049 that would include an AMT patch without an offset and extensions of a variety of
expiring tax provisions that would be offset. Motions to proceed to H.R. 6049,
however, failed because the Senate was unable to invoke cloture on the measure on June
10, 2008, and again on June 17, 2008. On June 18, 2008, the House Ways and Means
Committee reported out H.R. 6275, which provides an AMT patch that is offset (the
patch is estimated to cost $61.8 billion). The House approved H.R. 6275 on June 25,
2008, as reported.
This report will be updated as legislative action warrants.

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Introduction
In 1969, after a number of high-visibility television, magazine, and news stories
about a relatively small number of extremely wealthy individuals who paid virtually no
income taxes, the alternative minimum tax (AMT) for individuals was enacted to ensure
that all taxpayers pay at least a minimum amount of federal taxes.1 It was designed so that
individuals could not take unfair advantage of the various preferences and incentives
under the regular income tax to substantially reduce their regular income tax liability
below what was considered appropriate for their income level. The AMT functions as a
parallel tax system to the regular income tax. Taxpayers calculate their regular income
tax and then calculate their AMT. If their AMT liability is larger than their regular
income tax liability, then they pay the AMT.
There is projected to be a significant increase in the number of middle- to
upper-middle-income taxpayers affected by the AMT in the near future. In 2006, about
4.2 million taxpayers were subject to the AMT. If not for the patch provided in P.L.
110-166, enacted on December 26, 2007, up to 23 million taxpayers would have been
subject to the AMT in 2007.2 For the 2008 tax year, 25.7 million taxpayers are projected
to be affected by the AMT absent congressional action.3
There are two main reasons for the increase in the number of taxpayers affected by
the AMT. First, the regular income tax is indexed for inflation, but the AMT is not. Over
time, this has reduced the differences between regular income tax liabilities and AMT
liabilities at any given nominal income level, differences that will continue to shrink in
the absence of AMT indexation. The second reason is that the 2001 and 2003 reductions
in the regular income tax have further narrowed the differences between regular and AMT
tax liabilities. The combination of these two factors means that, absent legislative
changes, there will be significant growth in the number of taxpayers affected by the
AMT.4

Since 1998, the effects of the AMT have been mitigated through temporary
provisions allowing certain personal tax credits to offset AMT liability and temporary
increases in the basic exemption for the AMT. The Tax and Trade Relief Extension Act
of 1998 allowed taxpayers to use nonrefundable personal tax credits in full against their
regular income tax even though the use of the credits might reduce a taxpayer’s regular
income tax liability below their AMT liability.
1 There is also a corporate minimum tax, but it is not addressed in this report.
2 U.S. Congress, Joint Committee on Taxation, Present Law and Background Relating to the
Individual Alternative Minimum Tax, JCX-38-07, June 25, 2007.
3 Joint Committee on Taxation, June 25, 2007.
4 For more detailed information on which taxpayers will be affected by the AMT, see CRS Report
RS21817, The Alternative Minimum Tax (AMT): Income Entry Points and “Take Back” Effects,
by Gregg Esenwein; CRS Report RS22200, The Potential Distribution Effects of the Alternative
Minimum Tax, by Steven Maguire; and CRS Report RS22083, Alternative Minimum Taxpayers
By State: 2004, 2005, and Projections for 2008, by Steven Maguire.

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The Economic Growth and Tax Relief Reconciliation Act of 2001 (P.L. 107-16,
EGTRRA) temporarily increased the AMT exemption amounts from $45,000 to $49,000
for joint returns and from $33,750 to $35,750 for unmarried individuals with the changes
effective for tax years between 2001 and 2004.
The Job Creation and Worker Assistance Act of 2002 (P.L. 107-147) extended the
temporary provisions, first enacted in 1998 and then extended in 1999, that allowed
individuals to use all personal tax credits against both their regular and AMT tax
liabilities. This change was effective through December 31, 2003.
The Jobs and Growth Tax Relief Reconciliation Act of 2003 (P.L. 108-27, JGTRRA)
increased the basic AMT exemption amount to $58,000 for joint returns and to $40,250
for unmarried taxpayers. These increases were in effect for tax years 2003 and 2004.
JGTRRA also established that the new maximum tax rate of 15% applicable to capital
gains and dividend income under the regular income tax would also apply to the taxation
of capital gains and dividend income under the AMT.
The Working Families Tax Relief Act of 2004 (P.L. 108-311, WFTRA) extended
through 2005 JGTRRA’s increase in the basic AMT exemption amounts. WFTRA also
extended the provision allowing nonrefundable personal tax credits to offset both regular
and AMT tax liability in full for taxable years 2004 and 2005.
The American Jobs Creation Act of 2004 (P.L. 108-357) made several changes to
the AMT. It coordinated farmer and fisherman income averaging with the AMT so that
the use of income averaging did not push taxpayers into the AMT. It repealed the 90%
limitation on the use of the AMT foreign tax credit. The act also allowed the credits for
alcohol used as a fuel and electricity produced by renewable resources to be used in full
against the AMT.
Legislative Action in the 109th Congress
In May 2006, Congress approved the Tax Increase Prevention and Reconciliation Act
of 2005 (P.L. 109-222, TIPRA) that included a one-year extension (through 2006) of both
the AMT’s personal-credit and increased-exemption provisions. For 2005, the exemption
amount was $58,000 for joint returns and $40,250 for unmarried taxpayers. TIPRA
increased the 2006 AMT exemption to $62,550 for joint returns and $42,500 for
unmarried taxpayers.
In December 2006, Congress passed the Tax Relief and Health Care Act of 2006
(P.L. 109-432). This act included a provision making the AMT tax credit refundable.
Under the act, taxpayers can claim an AMT refundable credit amount that is the greater
of (1) the lesser of $5,000 or the unused minimum credit, or (2) 20% of the unused
minimum credit. The unused credit is the credit attributable to tax years prior to the
previous three years. The AMT refundable credit is reduced for taxpayers with adjusted
gross incomes in excess of certain threshold amounts. (For joint returns in 2007, the
threshold is $234,600.) This provision applies to tax years beginning before January 1,
2013.

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Legislative Action in the 110th Congress
The FY2009 budget compromise, S.Con.Res. 70, which includes an offset AMT
patch, passed the Senate on June 4, 2008, and the House on June 5, 2008. Earlier, the
Senate Finance Committee, on April 17, 2008, released legislation, S. 2886, that would
extend the AMT patch through 2008 and allow the use of nonrefundable personal credits
against AMT liability. S. 2886 does not include offsets. More recently, Senator Baucus
unveiled a substitute amendment to H.R. 6049 that included an AMT patch without an
offset and extensions of a variety of expiring tax provisions that would be offset. Motions
to proceed to H.R. 6049, however, failed because the Senate was unable to invoke cloture
on the measure on June 10, 2008, and again on June 17, 2008.5 On June 18, 2008, the
House Ways and Means Committee approved H.R. 6275, which provides an AMT patch
that is offset. The House approved H.R. 6275 on June 25, 2008, providing for an AMT
patch that is offset.
The U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq
Accountability Appropriations Act of 2007 (H.R. 2206) was enacted on May 25, 2007,
and allowed the tax credits for the work opportunity credit and the credit for taxes paid
with respect to employee cash tips to be used in full against both the corporate and
individual alternative minimum taxes. The Tax Increase Prevention Act of 2007 (P.L.
110-166), enacted on December 26, 2007, set the AMT exemption levels at $66,250 for
joint filers and $44,350 for single filers and allows nonrefundable personal credits to
offset AMT liability. Table 1 presents an abbreviated chronology of the legislative action
resulting in the AMT patch (P.L. 110-166) for the 2007 tax year; Table 2 does the same
for the 2008 tax year.
Table 1. Votes on the 2007 Patch for the AMT in the 1st Session of
the 110th Congress
Date
Vehicle
Vote
Vote Description and Result
5/17/2007
S.Con.Res. 21 House Vote
Fiscal 2008 Budget Resolution - Conference Report
377
Among other things, this resolution called for a one-year patch
for the AMT.
Adopted (thus sent to the Senate) by a vote of 214-209.
5/17/2007
S.Con.Res 21
Senate Vote
Fiscal 2008 Budget Resolution - Conference Report
172
Among other things, this resolution called for a one-year patch
for the AMT.
Adopted by a vote of 52-40.
5/17/2007
H.R. 2206
Senate Vote
U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and
Iraq Accountability Appropriations Act, 2007.
P.L. 110-28
Among other things, this legislation included a waiver of
individual and corporate AMT limits on the work opportunity
tax credit and credit for taxes paid with respect to employee
cash tips.
Passed Senate by voice vote.
5 U.S. Congress, Senate Finance Committee, “Baucus Bill Extends Energy Incentives, Individual
and Business Tax Relief, Blocks Alternative Minimum Tax for Millions of Working Families,”
News Release, June 10, 2008.

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Date
Vehicle
Vote
Vote Description and Result
11/1/2007
H.R. 3996
Committee
Temporary Tax Relief Act/Vote to Report.
Vote
The bill would allow taxpayers to apply nonrefundable
personal credits against the AMT in 2007. The bill would also
increase the AMT exemption amount to $66,250 for joint filers
and $44,350 for individuals. These provisions provided for a
one-year patch for the AMT. The bill also extended several
expiring tax provisions for one year. The bill expanded the
eligibility for the refundable child tax credit by setting the
threshold for the credit at $8,500. To offset the cost of the
measure, the bill included provisions intended to raise revenue,
such as taxing the carried interest of private equity managers,
venture capitalists, and some real estate investors up to 35%
instead of the current 15%.
Reported favorably out of the committee (as amended) 22-13.
11/9/2007
H.R. 3996
House Vote
Alternative Minimum Tax Adjustment — Passage.
1081
The bill provided a one-year patch for the AMT. It also
extended several expiring tax provisions for one year. The bill
expanded the eligibility for the refundable child tax credit by
setting the threshold for the credit at $8,500. To offset the cost
of the measure, the bill included provisions intended to raise
revenue, such as taxing the carried interest of private equity
managers, venture capitalists, and some real estate investors up
to 35% instead of the current 15%.
Passed 216-193.
12/6/2007
H.R. 3996
Senate Vote
Alternative Minimum Tax Adjustment — Cloture.
414
Motion to invoke cloture (thus limiting debate) on the Reid,
D-Nev., motion to proceed with a vote on H.R. 3996 as passed
by the House.
Motion rejected 46-48.
12/6/2007
H.R. 3996
Senate Vote
Alternative Minimum Tax Adjustment — Passage.
415
Passage of a one-year AMT patch. Before passage, the Senate
S.Amdt. 3804
adopted by voice vote the Baucus, D-Mont., substitute
amendment no. 3804 that dropped the tax offsets and other
non-AMT tax reduction extenders contained in the House bill.
Passed 88-5.
12/12/2007
H.R. 4351
House Vote
Alternative Minimum Tax Adjustment — Passage.
1153
Passage of the bill that would provide a one-year patch for the
AMT in 2007. In addition, the bill would expand the eligibility
in 2008 for the refundable child tax credit by setting the
threshold for the credit at $8,500. The other tax cuts included
in the original bill passed by the House on Nov. 9 were
dropped from this bill. To offset the costs of the AMT patch,
the bill would limit a number of tax breaks, including the
ability of taxpayers to use offshore arrangements for deferred
compensation by including it in gross income and taxing it on a
current basis.
Passed 226-193.
12/19/2007
H.R. 3996
House Vote
Alternative Minimum Tax Adjustment — Passage.
1183
Rangel, D-N.Y., motion to suspend the rules and concur with
Enacted
P.L. 110-166
the Senate amendment (S.Amdt. 3804) to the bill that would
12/26/2007
provide a one-year patch for the AMT in 2007 without offsets.
The bill allows taxpayers to apply nonrefundable personal
credits against the AMT in 2007. The bill increases the AMT
exemption amount to $66,250 for joint filers and $44,350 for
individuals.
Motion agreed to, 352-64.

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Table 2. Votes on the 2008 Patch for the AMT in the 2nd Session of
the 110th Congress
Date
Vehicle
Vote
Vote Description and Result
3/13/2008
H.Con.Res. 312
House Vote
Fiscal 2009 Budget Resolution
(House FY2009
141
Among other things, this resolution calls for a one-year
Budget
patch for the AMT, which must be offset.
Resolution)
Passed 212-207.
3/14/2008
S.Con.Res. 70
Senate Vote
Fiscal 2009 Budget Resolution
(Senate FY2009
85
Among other things, this resolution calls for a one-year
Budget
patch for the AMT, which is not offset.
Resolution)
Passed 51-44.
6/04/2008
S.Con.Res. 70
Senate Vote
Among other things, this resolution calls for a one-year
and
(the final version
142
patch for the AMT, which must be offset.
6/05/2008
of FY2009
House Vote
Passed Senate 48-45; Passed House 214-210.
budget
382
agreement)
6/10/2008
H.R. 6049
Senate Vote
The Sen. Baucus substitute version of the legislation would
147 on
patch the AMT for 2008 and extend several tax provisions
Cloture
for one year. The tax extenders would be offset; the AMT
Rejected
patch would not be offset. Cloture vote on motion to
proceed to H.R. 6049 rejected 50-44.
6/17/2008
H.R. 6049
Senate Vote
The Sen. Baucus substitute version of the legislation would
150 on
patch the AMT for 2008 and extend several tax provisions
Cloture
for one year. The tax extenders would be offset; the AMT
Rejected
patch would not be offset. Cloture vote on motion to
proceed to H.R. 6049 rejected 52-44.
6/18/2008
H.R. 6275
Committee
Rep. Charles Rangel’s bill would allow nonrefundable
Vote
personal tax credits to offset AMT tax liability and would
increase the AMT exemption amounts to $69,950 for joint
returns and $46,200 for single returns. The patch is offset.
These changes would be effective for one year, 2008.
6/25/2008
H.R. 6275
House Vote
Rep. Charles Rangel’s bill providing for an offset AMT
455
patch was approved 233-189.
Administration’s Proposals
The Administration’s FY2009 budget proposal includes a one-year patch for the
AMT. The Administration’s proposal would increase the basic AMT exemption to
$70,050 for joint returns and $46,250 for unmarried taxpayers. It would also allow all
nonrefundable personal tax credits to offset AMT liability in full. These changes would
be effective for 2008 only. The estimated federal revenue loss from this proposal is $58.4
billion for the FY2008 to FY2010 budget window.

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