How much is the AMT?

The Alternative Minimum Tax (AMT) in the United States operates under a unique taxation system, featuring two distinct tax rates: 26% and 28%. This two-tiered approach sets it apart from the more comprehensive federal income tax system, which encompasses seven varying brackets.

The AMT rates of 26% and 28% are applied to taxpayers who fall under its jurisdiction, typically those with certain types of deductions or income streams. This taxation method ensures that even with the utilization of deductions, individuals and entities pay a minimum amount of tax.

In contrast, the federal income tax system is far more elaborate, spanning seven tax brackets ranging from 10% to 37%. This graduated system allows for a more nuanced approach to taxation, with higher-income earners paying a progressively higher percentage of their income in taxes.

The disparity between the AMT and federal income tax rates highlights the complexity of the US tax code. While the AMT aims to prevent tax avoidance through deductions, the federal income tax system seeks to distribute the tax burden more evenly across various income levels.

It's important to note that not all taxpayers are subject to the AMT. Its application is dependent on various factors, including income level, deductions claimed, and other specific circumstances. As such, it serves as a supplementary tax mechanism rather than a primary means of taxation.