Alternative Minimum Tax Relief

The alternative minimum tax (AMT) is designed to ensure that individuals who have significant income-tax deductions or credits pay a minimum amount of tax. The law provides a minimum tax exemption to each taxpayer. The 2001 tax cut law increased the AMT exemption amounts through the 2004 tax year. However, Congress felt that the exemption amounts were still too low and so, as part of the 2003 Act, it increased them further. For 2003 and 2004, the exemption amounts increase as follows:

• For married persons filing jointly, from $49,000 to $58,000.

• For heads of households and single filers, from $35,750 to $40,250.

• For married persons filing separately, from $24,500 to $29,000.

After 2004, the exemption amounts return to pre-2001 law levels.