Alternative Minimum Tax Update

Earlier on this blog, I discussed legislation that had passed the House regarding the alternative mininum tax.

Yesterday (December 19, 2007), Congress approved AMT relief legislation and President Bush has indicated that he will sign the bill.

The following excerpts are from David M. Herszenhorn, Congress Averts Higher Tax Bill for Middle Class, NY Times, Dec. 20, 2007:

The tax reprieve postpones for one year only an expansion of the alternative minimum tax, a parallel tax system enacted in 1969 to prevent very wealthy investors from using deductions and tax shelters to avoid paying income tax altogether. The alternative tax has ensnared a growing number of middle-class Americans in recent years because the 1969 law was not indexed to inflation.

Without the fix by Congress, some 25 million filers would have had to pay the tax on their 2007 income, up from four million who paid it on 2006 income, according to the White House.* * *

The measure would increase slightly the amount of income that is exempt from the alternative tax. For individuals, that means the exempt amount increases to $44,350 in 2007 from $42,500 in 2006. For married couples, the exemption amount climbs to $66,250 from $62,550.