by Carolyn Rothwell on January 29, 2013

ATRA (Part 2) - AMT: Patches End, Phase-Out Indexing Begins


The Alternative Minimum Tax which has been patched almost every year since 2001, will now have inflation indexing attached to the Exemption Amounts starting with a base of $78,750 in 2012 for Married Filing Jointly and $50,600 for Single or Head of Household. Everyone is talking about this though, and no one seems to be talking about something far more interesting: the phase-out starting point will be indexed moving forward as well.

These phase-out levels have not been adjusted along with the exemptions since 2001, and are much less popular to talk about, but may become very important in the next several years. A lot of commentary is predicting that many Americans will eventually be impacted by AMT, but because of the indexing it will take longer to get there. The phase-out being indexed will help this take longer as well. 

AMT ATRA

For anyone not familiar with AMT exemption phase-outs, here’s a summary of how they work. The exemption amount ($78,750/$50,600) is reduced $0.25 for each $1 the taxpayer’s alternative minimum taxable income (AMTI) is above the phase-out thresholds.

For 2012 these limits remained at $150,000 for joint filers and $112,500 for married filers, and without the adjustments made would have completely wiped out the exemption amount for a joint filer with an AMTI of $465,000 or a single filer with AMTI of $314,900. For 2013 these are increasing to $153,900 ($477,100) for joint and $115,400 ($323,000) for single filers.

Subscribe to Email Updates

Recent Posts

Planner Guides

Check out our free informational guides for advisors including:
  • Fundamental Financial Planning Interview Guide 
  • Making the Most out of Planning Engagements
  • Social Security: Choices Opportunities, and Decisions
  • Understanding Medicare Fundamentals

Popular Posts

Carolyn Rothwell

Carolyn enjoys spending her time building Money Tree Software's brand and products. Her experience creating and delivering financial plans for a full-service financial planning firm and supporting advisors working to provide the best planning to their clients as a Money Tree support member has provided an excellent understanding of the importance of financial planning.