Alternative Minimum Taxpayers by State:
2009, 2010, and Projections for 2012
Steven Maguire
Specialist in Public Finance
December 4, 2012
Congressional Research Service
7-5700
www.crs.gov
RS22083
CRS Report for Congress
Pr
epared for Members and Committees of Congress
Alternative Minimum Taxpayers by State: 2009, 2010, and Projections for 2012
Summary
The alternative minimum tax (AMT) is a second federal income tax that operates along side the
regular income tax. The AMT is intended to ensure that all taxpayers pay at least a minimum
amount of tax on income. The AMT disallows or otherwise limits a variety of exemptions and
deductions to achieve this objective. Specifically, 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 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 and local
taxes, claim miscellaneous deductions, or have large families are more likely to fall under the
AMT than taxpayers who do not have these characteristics.
In 2010, 4.02 million taxpayers were subject to the AMT, a slight increase from 3.88 million
taxpayers in 2009. In 2010, New Jersey, Connecticut, the District of Columbia, and New York
had the highest percentage of taxpayers subject to the AMT. Mississippi, Tennessee, Alabama,
and South Dakota had the lowest percentage of taxpayers subject to the AMT.
In 2012, absent an increase of the AMT exemption amount, 32.4 million taxpayers will be subject
to the AMT. At that time, whether a married taxpayer has itemized deductions for state and 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 incomes will be subject to the AMT because personal
exemptions are not allowed against the AMT.
The President’s FY2013 Budget proposes an alternative budget baseline where the AMT is
permanently indexed for inflation based on 2011 parameters. The estimated revenue loss,
assuming the tax cuts enacted from 2001 to 2003 are extended for middle income taxpayers,
would be $1.9 trillion over the FY2013-FY2022 budget window.
This report will be updated as legislative action warrants or as new data become available.
Congressional Research Service
Alternative Minimum Taxpayers by State: 2009, 2010, and Projections for 2012
Contents
Figures
Figure 1. Percentage of Taxpayers in Each State Subject to AMT in 2010 ..................................... 2
Tables
Table 1. Number of Alternative Minimum Taxpayers by State, Tax Year 2009 .............................. 4
Table 2. Number of Alternative Minimum Taxpayers by State, Tax Year 2010 .............................. 6
Table 3. Estimated Number of Alternative Minimum Tax Taxpayers by State, Tax Year
2012 .............................................................................................................................................. 8
Congressional Research Service
Alternative Minimum Taxpayers by State: 2009, 2010, and Projections for 2012
he 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
Tindexation 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 expire at the end of 2011. The Urban-Brookings Tax
Policy Center estimates that in 2012, 32.4 million taxpayers will be subject to the AMT.2
Taxpayers with incomes in the $200,000 to $500,000 income range will be the hardest hit.3
Itemized deductions for state and 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.4 As a result,
over certain income ranges, taxpayers who claim itemized deductions for state and local taxes,
claim 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 2009 and 2010 (the latest state-by-state data), respectively, the
percentage of taxpayers in each state that were subject to the AMT. Figure 1 maps the percentage
of AMT taxpayers by state for the 2010 tax year. Nationally, 2.8% of taxpayers were subject to
the AMT in 2010.
Of all the states, Mississippi, Tennessee, Alabama, and South Dakota had the smallest percentage
of taxpayers subject to the AMT. In these four states, just over 1% of taxpayers were on the AMT
in 2010. These are states in which either many taxpayers have relatively low incomes, or state and
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.5
On the other hand, New Jersey, Connecticut, the District of Columbia, and New York were the
states with the largest percentage of taxpayers subject to the AMT. In these four states, over 5% of
taxpayers were affected by the AMT. For instance, in New Jersey, about 64 out of every 1,000
taxpayers fell under the AMT in 2010. In these states, many taxpayers have relatively high
incomes and the state and 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 captured by the AMT.
Note that absent legislative change (an AMT patch), whether a married taxpayer has itemized
deductions for state and 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
1 See CRS Report RL30149, The Alternative Minimum Tax for Individuals, by Steven Maguire.
2 Urban-Brookings Tax Policy Microsimulation Model (version 0412-07), “T12-0170 – Number of AMT Taxpayers
with and without an AMT Fix, 2011-2013,” September 13, 2012. Data available at http://www.taxpolicycenter.org/
numbers/Content/PDF/T12-0170.pdf.
3 U.S. Congress, Joint Committee on Taxation, “Present Law and Background Data related to the Federal Tax System
in Effect for 2010 and 2011,” JCX-19-10, March 22, 2010, p. 43.
4 U.S. Congress, Joint Committee on Taxation, “Present Law and Background Relating to the Alternative Minimum
Tax,” JCX-38-07, June 25, 2007, p. 18.
5 For more on the deductibility of state and local taxes, see CRS Report RL32781, Federal Deductibility of State and
Local Taxes, by Steven Maguire.
Congressional Research Service
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Alternative Minimum Taxpayers by State: 2009, 2010, and Projections for 2012
AMT is not modified, then across a broad range of the income spectrum a large portion of
married taxpayers will be subject to the AMT. This is true whether they itemize their deductions
or not because personal exemptions are not allowed against the AMT.
Figure 1. Percentage of Taxpayers in Each State Subject to AMT in 2010
Source: CRS representation of data from Department of the Treasury, Internal Revenue Service, available at
http://www.irs.gov/uac/SOI-Tax-Stats—Historic-Table-2, visited November 27, 2012.
Notes: Table 2 reports the data used to generate this graphic.
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. In December 2007, The Tax
Increase Prevention Act of 2007 (TIPA, P.L. 110-166) patched the AMT for the 2007 tax year. In
October 2008, The Tax Extenders and Alternative Minimum Tax Relief Act (which was included
with the Emergency Economic Stabilization Act of 2008, P.L. 110-343), extended the AMT patch
for the 2008 tax year.
In the 111th Congress, P.L. 111-5, The American Recovery and Reinvestment Act of 2009,
included a one-year patch for the 2009 tax year. The Tax Relief, Unemployment Insurance
Reauthorization, and Job Creation Act of 2010 (TRUIRJCA, P.L. 111-312), patched the AMT for
2010 and 2011 tax years. Under TRUIRJCA, the 2010 exemptions amounts are $47,450 for
individuals and $72,450 for joint filers. For 2011, the exemption amounts increase to $48,450 and
$74,450, respectively. In 2012 and beyond, absent legislative change, the AMT exemption reverts
to $45,000 for joint returns ($35,750 for unmarried taxpayers), and some nonrefundable tax
credits are not allowed against AMT liability.
Congressional Research Service
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Alternative Minimum Taxpayers by State: 2009, 2010, and Projections for 2012
Because the AMT patch expired at the end of 2011, in 2012 roughly 32.4 million taxpayers will
likely be subject to the AMT if no patch is enacted.6 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, 31,896 taxpayers in Tennessee were subject to the AMT in 2010. Thus, Tennessee
taxpayers accounted for 0.78% of the total AMT returns filed in the United States that year.
However, if that percentage of total AMT returns remains constant, then in 2012 roughly 360,226
(0.78% times 32.4 million) taxpayers in Tennessee could be affected by the AMT.
Table 3 shows the potential number of AMT returns by state in 2012 if the patch to the AMT is
not extended. 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
2012 as it was in 2010. The methodology makes assumptions that could be challenged, but still
provides a reasonable estimate of the potential impact of the AMT in 2012 absent legislative
changes.7
The President’s FY2013 alternative budget baseline proposes a permanently indexed AMT based
on the 2011 parameters. The revenue loss is $1.9 trillion with the assumption that the tax cuts
enacted from 2001 to 2003 are also extended for all but the highest income earners.8 These
proposed tax cuts are not extended to joint filers with income over $250,000, single filers with
income over $200,000, and heads of household with income over $225,000.
6 Urban-Brookings Tax Policy Microsimulation Model (version 0412-07), “T12-0170 – Number of AMT Taxpayers
with and without an AMT Fix, 2011-2013,” September 13, 2012.
7 For example, if the AMT is not patched, many more taxpayers in lower income cohorts would be subject to the AMT.
Thus, the share of AMT taxpayers in states with relatively lower average income could be greater than projected in this
report.
8 U.S. Treasury, General Explanation of the Administration’s 2013 Budget Proposal, February 2012, p. 197.
Congressional Research Service
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Alternative Minimum Taxpayers by State: 2009, 2010, and Projections for 2012
Table 1. Number of Alternative Minimum Taxpayers by State, Tax Year 2009
AMT
AMT
Number of
AMT
Returns
Number of
AMT
Returns
Rank State Returns
Returns
as % of Total
Rank
State
Returns
Returns
as % of Total
U.S.A.
141,458,638 3,844,217 2.7%
47 Alabama
2,048,831
23,895
1.2%
38 Montana
472,039
7,027
1.5%
48 Alaska
357,870
4,103
1.1%
24 Nebraska
846,101
16,546
2.0%
35 Arizona
2,670,661
41,699
1.6%
44 Nevada
1,243,552 15,412
1.2%
41
Arkansas
1,211,644
17,578
1.5%
15
New Hampshire
659,001
14,979
2.3%
7 California
16,384,130 685,141
4.2%
1 New
Jersey
4,236,533 265,495
6.3%
17
Colorado
2,331,974
51,537
2.2%
46
New Mexico
912,316
10,695
1.2%
2
Connecticut
1,711,715
93,729
5.5%
3
New York
9,116,699
477,166
5.2%
20
Delaware
420,472
8,865
2.1%
19
North Carolina
4,144,875
87,720
2.1%
4
District of Columbia
312,067
16,133
5.2%
37
North Dakota
322,972
4,839
1.5%
34 Florida
8,910,654 141,118
1.6%
16 Ohio
5,409,661 120,055
2.2%
13
Georgia
4,447,966
106,477
2.4%
39
Oklahoma
1,585,616
23,342
1.5%
30 Hawai
648,846
11,122
1.7%
14 Oregon
1,732,774 40,127
2.3%
40 Idaho
657,773
9,617
1.5%
12 Pennsylvania
6,058,513 150,253
2.5%
11
Illinois
6,008,183
160,561
2.7%
10
Rhode Island
501,586 13,669 2.7%
42
Indiana
2,951,362
41,535
1.4%
36
South Carolina
2,024,495
30,931
1.5%
31
Iowa
1,392,004
23,816
1.7%
50
South Dakota
385,157
4,238
1.1%
21
Kansas
1,310,164
27,442
2.1%
51
Tennessee
2,794,712
29,024
1.0%
33
Kentucky
1,841,152
29,892
1.6%
25
Texas
10,784,887
206,222
1.9%
28 Louisiana
1,960,107
33,875
1.7%
32 Utah
1,124,569 19,029
1.7%
23
Maine
624,567
12,249
2.0%
18
Vermont
316,053
6,791
2.1%
5 Maryland
2,751,233 132,676
4.8%
8 Virginia
3,685,674 130,531
3.5%
6
Massachusetts
3,171,888
141,581
4.5%
29
Washington
3,144,952
54,351
1.7%
26
Michigan
4,534,729
81,589
1.8%
43
West Virginia
778,130
9,764
1.3%
CRS-4
Alternative Minimum Taxpayers by State: 2009, 2010, and Projections for 2012
AMT
AMT
Number of
AMT
Returns
Number of
AMT
Returns
Rank State Returns
Returns
as % of Total
Rank
State
Returns
Returns
as % of Total
9 Minnesota
2,541,797 70,575
2.8%
22 Wisconsin
2,728,034 55,952
2.1%
49
Mississippi
1,241,390
14,012
1.1%
45
Wyoming
269,357
3,305
1.2%
27
Missouri
2,683,562
47,551
1.8%
Other Areas*
1,053,639
18,386
1.7%
Source: Department of the Treasury, Internal Revenue Service, available at http://www.irs.gov/uac/SOI-Tax-Stats—Historic-Table-2, visited November 27, 2012.
Notes: * Includes, for example, returns filed from Army Post Office and Fleet Post Office addresses by members of the armed forces stationed overseas; returns filed by
other U.S. citizens abroad; and returns filed by residents of Puerto Rico with income from sources outside Puerto Rico or with income earned as U.S. government
employees.
CRS-5
Alternative Minimum Taxpayers by State: 2009, 2010, and Projections for 2012
Table 2. Number of Alternative Minimum Taxpayers by State, Tax Year 2010
Number of
AMT Returns
Number of
AMT Returns
Rank State
Returns AMT
Returns
as % of Total
Rank
State
Returns AMT
Returns
as % of Total
U.S.A.
144,002,309 4,063,557 100.00%
31 Alabama
2,102,251
24,756
0.61%
46 Montana
474,851
7,461
0.18%
50 Alaska
373,765
4,611
0.11%
34 Nebraska
854,072
17,578
0.43%
23 Arizona
2,718,609
42,604
1.05%
37 Nevada
1,263,928
15,725
0.39%
33 Arkansas
1,224,333
18,363
0.45%
36 New
Hampshire
663,922
16,327
0.40%
1 California
16,683,781
745,665
18.35%
3 New
Jersey
4,285,543
274,572
6.76%
19
Colorado
2,369,949
56,282
1.39%
42
New Mexico
913,001
11,441
0.28%
13
Connecticut
1,727,550
97,467
2.40%
2
New York
9,272,053
493,556
12.15%
45 Delaware
427,754
9,760
0.24%
14 North
Carolina
4,202,766
93,665
2.31%
35
District of Columbia
322,864
17,546
0.43%
48
North Dakota
330,462
5,545
0.14%
7 Florida
9,631,252
150,725
3.71%
11 Ohio
5,437,370
126,117
3.10%
12 Georgia
4,589,611
110,177
2.71%
30 Oklahoma
1,590,384
25,139
0.62%
41 Hawai
653,371
11,670
0.29%
22 Oregon
1,743,270
43,418
1.07%
44 Idaho
663,291
9,990
0.25%
6 Pennsylvania
6,129,987
157,469
3.88%
5 Illinois
6,043,865
169,384
4.17%
39
Rhode Island
509,091
14,141
0.35%
21 Indiana
2,981,543
43,960
1.08%
25 South
Carolina
2,051,823
32,218
0.79%
29
Iowa
1,399,927
25,149
0.62%
49
South Dakota
393,777
4,658
0.11%
28 Kansas
1,307,115
28,445
0.70%
26 Tennessee
2,846,579
31,896
0.78%
27
Kentucky
1,856,466
30,957
0.76%
4
Texas
10,995,576
222,513
5.48%
24 Louisiana
1,990,904
33,033
0.81%
32 Utah
1,134,626
19,841
0.49%
40 Maine
625,057
12,776
0.31%
47 Vermont
317,921
7,109
0.17%
10 Maryland
2,787,356
136,214
3.35%
9 Virginia
3,729,464
139,136
3.42%
8
Massachusetts
3,203,128
150,339
3.70%
17
Washington
3,169,103
59,502
1.46%
CRS-6
Alternative Minimum Taxpayers by State: 2009, 2010, and Projections for 2012
Number of
AMT Returns
Number of
AMT Returns
Rank State
Returns AMT
Returns
as % of Total
Rank
State
Returns AMT
Returns
as % of Total
15 Michigan
4,606,814
83,515
2.06%
43 West
Virginia
783,239
10,121
0.25%
16 Minnesota
2,561,055
75,458
1.86%
18 Wisconsin
2,741,669
58,950
1.45%
38 Mississippi
1,283,495
14,270
0.35%
51 Wyoming
276,444
3,568
0.09%
20
Missouri
2,688,872
48,856
1.20%
Other Areas*
1,067,410
19,919
0.49%
Source: Department of the Treasury, Internal Revenue Service, available at http://www.irs.gov/uac/SOI-Tax-Stats—Historic-Table-2, visited November 27, 2012.
Notes: * Includes, for example, returns filed from Army Post Office and Fleet Post Office addresses by members of the armed forces stationed overseas; returns filed by
other U.S. citizens abroad; and returns filed by residents of Puerto Rico with income from sources outside Puerto Rico or with income earned as U.S. government
employees.
CRS-7
Alternative Minimum Taxpayers by State: 2009, 2010, and Projections for 2012
Table 3. Estimated Number of Alternative Minimum Tax Taxpayers by State, Tax Year 2012
Potential AMT Returns
Potential AMT Returns
State
AMT Returns in 2010
in 2012 (CRS)
State
AMT Returns in 2010
in 2012 (CRS)
U.S.A. 4,063,557
32,400,000
Alabama
24,756
197,387
Montana
7,461
59,489
Alaska
4,611
36,765
Nebraska
17,578
140,155
Arizona
42,604 339,695
Nevada 15,725 125,380
Arkansas
18,363 146,414
New
Hampshire
16,327 130,180
California
745,665 5,945,418
New
Jersey
274,572 2,189,248
Colorado
56,282
448,754
New Mexico
11,441
91,223
Connecticut
97,467
777,135
New York
493,556
3,935,275
Delaware
9,760
77,820
North Carolina
93,665
746,820
District of Columbia
17,546
139,900
North Dakota
5,545
44,212
Florida
150,725 1,201,777
Ohio
126,117 1,005,570
Georgia
110,177
878,475
Oklahoma
25,139
200,441
Hawaii
11,670
93,049
Oregon
43,418
346,185
Idaho
9,990
79,653
Pennsylvania
157,469
1,255,549
Illinois
169,384
1,350,551
Rhode Island
14,141
112,751
Indiana
43,960
350,507
South Carolina
32,218
256,884
Iowa
25,149
200,521
South Dakota
4,658
37,140
Kansas
28,445
226,801
Tennessee
31,896
254,317
Kentucky
30,957
246,830
Texas
222,513
1,774,165
Louisiana
33,033 263,382
Utah
19,841 158,198
Maine
12,776
101,867
Vermont
7,109
56,682
Maryland
136,214 1,086,076
Virginia
139,136 1,109,374
Massachusetts
150,339
1,198,699
Washington
59,502
474,428
CRS-8
Alternative Minimum Taxpayers by State: 2009, 2010, and Projections for 2012
Potential AMT Returns
Potential AMT Returns
State
AMT Returns in 2010
in 2012 (CRS)
State
AMT Returns in 2010
in 2012 (CRS)
Michigan
83,515
665,891
West Virginia
10,121
80,698
Minnesota
75,458 601,650
Wisconsin
58,950 470,027
Mississippi
14,270
113,779
Wyoming
3,568
28,449
Missouri
48,856
389,544
Other Areas*
19,919
158,820
Source: CRS Calculations based on Department of the Treasury, Internal Revenue Service data, available at http://www.irs.gov/uac/SOI-Tax-Stats—Historic-Table-2, visited
November 27, 2012.
Notes: * Includes, for example, returns filed from Army Post Office and Fleet Post Office addresses by members of the armed forces stationed overseas; returns filed by
other U.S. citizens abroad; and returns filed by residents of Puerto Rico with income from sources outside Puerto Rico or with income earned as U.S. government
employees.
CRS-9
Alternative Minimum Taxpayers by State: 2009, 2010, and Projections for 2012
Author Contact Information
Steven Maguire
Specialist in Public Finance
smaguire@crs.loc.gov, 7-7841
Congressional Research Service
10