The Alternative Minimum Tax (AMT) was created over 50 years ago to ensure that higher-income taxpayers could not substantially or even completely eliminate their federal tax obligations through the exploitation of excessive credits and deductions. The 2017 Trump-GOP tax law made the AMT less effective through both direct and indirect changes, reducing federal tax revenue by $637 billion over 10 years. The Republican law directly loosened AMT rules in two ways:

1. It increased the amount of income exempt from the AMT by 30%. In 2024 that amount stands at $133,300 per couple.
2. It dramatically raised the income level at which the phaseout for tax exemption begins—a six-fold increase for married couples. For 2024, it’s over $1.2 million per couple. Under these laxer rules, some portion of a couple’s income up to $1.5 million could be shielded from the AMT. That compares with about $500,000 under the rules in place before the Republican law. 

Additionally, the Trump-GOP tax law’s elimination or restriction of some of the mechanisms used to lower taxable income—such as personal exemptions, business losses, and certain itemized deductions—also had the indirect effect of reducing the number of households subject to the AMT. Collectively, the number of taxpayers paying the AMT fell from around 5 million in 2017 to just 200,000 in 2018. 

All of these changes are scheduled to expire at the end of 2025. The exemption amount and phase-out threshold will revert to their pre-Trump levels, adjusted for inflation, while personal exemptions, businesses losses, and itemized deductions are scheduled to return as well. Based on the most recent CBO estimates, the expiration of the Trump-law rules would set the AMT exemption for couples at $110,400 and cut the phaseout threshold for couples by a million dollars to $210,300.

If the Trump AMT changes are instead extended, they will lose $1.36 trillion in revenue over the next decade. The Committee for Responsible Federal Budget estimates that about half of the tax benefit from extending this policy would go to households with over $400,000 of income 

We recommend extending the elevated exemption amount, but dramatically reducing the AMT phaseout threshold for married couples.