Millions await action on AMT to avoid tax pinch

"If nothing is changed this year, one in six taxpayers will be affected by the AMT, paying on average an additional $3,900 in tax, and nearly every married taxpayer with income between $100,000 and $500,000 will owe some alternative tax," states the Congressional Budget Office (CBO), the official scorekeeper for Capitol Hill. 

The last AMT patch expired in 2009, and lawmakers have yet to tackle the issue for 2010 by indexing the levy for inflation to keep it from hitting lower-income taxpayers. Last year's patch meant that only 4 million people paid the tax, versus 27 million this year if lawmakers fail to act. 

"The AMT accounted for just $32 billion, or 3 percent, of individual income tax revenue in fiscal year 2009, but under current law, AMT receipts will increase to $102 billion in 2011, or 8 percent of the total," the CBO states.

Included in that dollar figure are individuals who earn less than $200,000 and couples making less than $250,000, who aren't supposed to see a tax increase this year. 

The CBO states that taxpayers with adjusted gross incomes of less than $200,000 will account for 84 percent of AMT payers in 2010, up from 30 percent in 2009. The average tax increase for this group will be $2,900. 

Of that 84 percent, 3 percent of households making less than $50,000 and 35 percent of households making between $50,000 and $100,000 will pay more this year. Forty-seven percent of taxpayers earning between $100,000 and $200,000 will also pay the tax, up from 23 percent last year.