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To keep middle-income people from being unfairly hit by the AMT, Congress has enacted temporary relief during each of the past several years, including new AMT credits specific to ISOs. The tactic has been to raise the AMT income exemption amounts slightly each year in accordance with inflation. Without these annual "patches" to control the spread of the AMT, the AMT exemption amounts would return to the low levels of 2000 ($45,000 for joint filers and $33,750 for singles), imposing the AMT on a vast population of middle-income taxpayers it was never intended to tax.
Set by the 2010 Tax Relief Act, passed in December 2010, the temporary AMT income exemption amounts for 2011 are $74,450 and $48,450. However, the AMT calculation phases out this exemption for high incomes.
The now routine legislative patches to extend the AMT income exemption amounts are just one arena of conflict in the broader battle over tax law that looms in Congress. While 2011 was a quiet year for AMT legislation, some action will be needed in 2012 to extend AMT relief beyond 2011. Given that the patches for 2010 and 2011 were not enacted until the very end of 2010, it would not be surprising if Congress took no action on the 2012 patch, or other tax-reform measures, until after the presidential election in November 2012.
See a related FAQ on the likelihood of triggering the AMT with your income. |
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