Alternative Minimum Taxpayers by State

Publication Date: March 2005

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Banking and finance

Type:

Abstract:

Personal exemptions, itemized deductions for state/local taxes, and miscellaneous itemized deductions account for 90% 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, and/or have large families are more likely to fall under the AMT than taxpayers who do not have these characteristics.

In 2003, New Jersey, New York, Connecticut, the District of Columbia, and California had the highest percentage of taxpayers subject to the AMT. Tennessee, South Dakota, Alaska, Alabama, and Mississippi had the lowest percentage of taxpayers subject to 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 AMT coverage. This will result because, if the AMT is not modified, then across a broad range of the income spectrum all married taxpayers will be subject to the AMT whether they itemize their deductions or not.

This report will be updated as legislative action warrants or as new data become available.