Will the AMT Return Amid Fiscal Challenges?

The federal government is grappling with serious fiscal challenges: a $36 trillion debt, a $2 trillion deficit, and spending that far exceeds revenue. While the 2017 Tax Cuts and Jobs Act (TCJA) introduced relief for many taxpayers, its potential sunset in 2025 could reintroduce for many taxpayers, some of whom have never paid, the Alternative Minimum Tax (AMT).

The AMT ensures certain taxpayers pay a minimum level of tax by adding back items like:

• State and local tax deductions exceeding $10,000, if the SALT imit is eliminated 

• Unrealized Incentive Stock Option (ISO) gains

• Miscellaneous itemized deductions

Without TCJA, AMT exposure could grow significantly, especially for households earning $100,000–$600,000. Additionally, changes could lower AMT exemptions, pushing more people into the AMT zone and increasing marginal tax rates to 32.5% or 35%.

While Trump’s election might suggest tax cuts will continue, the precarious federal budget could prompt surprising tax policy shifts. Are you prepared for these potential changes? Reach out to explore how the AMT might impact you.