On Dec. 19, the House passed H.R. 3996, a one-year AMT patch, by a vote of 352-64. The bill would increase the AMT exemption amount to $66,250 for joint filers and $44,350 for single filers, ensuring that no additional taxpayers are liable for the AMT this year.
NFIB is pleased that Congress passed this important tax relief without tax increases. NFIB believes that since the AMT was never intended to apply to middle-income tax payers, the revenue raised was also unintended and should not be paid for by raising other taxes.
The Senate passed H.R. 3996 Dec. 6 by a vote of 88-5. The President is expected to sign this into law soon.
Since this patch only applies to the upcoming tax season, Congress will address this issue again next year.
What is the AMT?
- The AMT, or Alternative Minimum Tax, was originally designed to ensure that the wealthiest Americans could not avoid paying income taxes.
- It requires taxpayers to calculate their taxes twice, and then pay the larger amount. The AMT increases your taxable income by taking away popular deductions such as the state and local sales tax deduction and certain depreciation deductions.
How will this bill affect NFIB members?
- The AMT was never indexed for inflation, meaning it increasingly impacts middle-income taxpayers and small-business owners. These groups were never intended to be the targets of this tax.
- H.R. 3996 provides a one-year "patch" for the AMT. Without this patch 23 million taxpayers would have been subject to the AMT.
- This legislation will also ensure that small businesses are not subject to other tax increases.
- Under a rule passed by this Congress, any new tax cut or mandatory spending bill must be "paid for," meaning they must either raise taxes or cut spending.
- This rule is referred to as "PAYGO" or pay-as-you-go.
- NFIB supported not applying pay-go rules to this legislation as all revenue raisers considered were tax increases and revenue raised from the AMT is unintended.
NFIB's work on the Hill
- NFIB sent a letter urging Congress to provide relief from the AMT without raising taxes on other taxpayers. NFIB also urged Congress to act quickly to avoid potential compliance and administrative burdens during the upcoming filing season.
- NFIB will continue to fight to protect small-business owners from tax increases to pay for any future AMT patches.
- NFIB supports full repeal of the AMT--without raising other taxes to "pay for" the repeal.
- In absence of full repeal, NFIB supports temporary AMT relief.
