Alternative Minimum Taxpayers by State: 2005, 2006, and Projections for 2008

Alternative Minimum Taxpayers by State:
2005, 2006, and Projections for 2008
Steven Maguire
Specialist in Public Finance
Government and Finance Division
Summary
Personal exemptions, itemized deductions for state/local taxes, and miscellaneous
itemized deductions account for 96% of the preference items that are subject to tax
under the alternative minimum tax (AMT) but not subject to tax under the regular
income tax. As a result, over certain income ranges, taxpayers who claim itemized
deductions for state/local taxes, miscellaneous deductions, or have large families are
more likely to fall under the AMT than taxpayers who do not have these characteristics.
In 2006, 4.1 million taxpayers were subject to the AMT. New Jersey, Connecticut,
New York, the District of Columbia, and Maryland had the highest percentage of
taxpayers subject to the AMT. South Dakota, Tennessee, Alaska, Mississippi, and
North Dakota had the lowest percentage of taxpayers subject to the AMT.
In 2008, absent legislative change, according to the Joint Committee on Taxation,
some 25.7 million taxpayers will be affected by the AMT. At that time, whether a
married taxpayer has itemized deductions for state/local taxes or miscellaneous
deductions will become a much less important factor than it is at present in determining
AMT coverage. This occurs because, whether they itemize their deductions or not,
married taxpayers across a wide range of the income spectrum will be subject to the
AMT because personal exemptions are not allowed against the AMT. This report will
be updated as legislative action warrants or as new data become available.
The alternative minimum tax for individuals (AMT) was originally enacted to ensure
that high-income taxpayers paid a fair share of the federal income tax. However, the lack
of indexation of the AMT coupled with the recent reductions in the regular income tax¹

has greatly expanded the potential impact of the AMT.
¹ See CRS Report RL30149, The Alternative Minimum Tax for Individuals, by Steven Maguire.

Temporary increases in the AMT exemptions expired at the end of 2007. If
legislative changes do not extend the expired changes, then the number of taxpayers
subject to the AMT will rise from around 5 million in 2007 to 24.2 million in 2008.
Further, by 2010, some 31 million taxpayers will be subject to the AMT.² Taxpayers with
incomes in the $100,000 to $500,000 income range will be the hardest hit: 88% of these
taxpayers will be subject to the AMT in 2010.
Itemized deductions for state/local taxes (62.7%), personal exemptions (22.4%), and
miscellaneous itemized deductions (11.4%) together account for 96% of the preference
items that are subject to tax under the AMT but not subject to tax under the regular
income tax.³ As a result, over certain income ranges, taxpayers who claim itemized
deductions for state/local taxes, miscellaneous deductions, and/or have large families are
more likely to fall under the AMT than taxpayers who do not have these characteristics.
Table 1 and Table 2 show for 2005 and 2006, respectively, the percentage of
taxpayers in each state that were subject to the AMT. Of all the states, South Dakota,
Tennessee, Alaska, Mississippi, and North Dakota had the smallest percentage of
taxpayers subject to the AMT. In these five states, roughly 1% of taxpayers were on the
AMT in 2006. These are states in which either many taxpayers have relatively low
incomes, or state/local taxes that are deductible from the federal income tax are relatively
low. As a result of the combination of these factors, taxpayers in these states tend not to
itemize their deductions and hence, are less likely to be subject to the AMT than taxpayers⁴
in other states.
On the other hand, New Jersey, Connecticut, New York, the District of Columbia,
and Maryland were the states with the largest percentage of taxpayers subject to the AMT.
For instance, in New Jersey, about 65 out of every 1,000 taxpayers fell under the AMT
in 2006. In these states, many taxpayers have relatively high incomes and the state/local
tax burden is also relatively high. The combination of these factors produces a larger
number of itemizers and, consequently, a larger percentage of taxpayers being captured
by the AMT.
Note that absent legislative change (a patch), whether a married taxpayer has
itemized deductions for state/local taxes and/or miscellaneous deductions will become
a less important factor in determining whether taxpayers are subject to the AMT. This
will result because, if the AMT is not modified, then across a broad range of the income
spectrum all married taxpayers will be subject to the AMT whether they itemize their
deductions or not.
The potentially expanding impact of the AMT has been mitigated through temporary
increases in the basic exemption for the AMT and temporary changes that allow taxpayers
to use nonrefundable personal tax credits to reduce their AMT liabilities. The most recent

² U.S. Congress, Joint Committee on Taxation, “Present Law and Background Relating to the
Alternative Minimum Tax,” JCX-38-07, June 25, 2007.
³ JCT, June 25, 2007, p. 18.
⁴ For more on the deductibility of state and local taxes, see CRS Report RL32781, Federal
Deductibility of State and Local Taxes, by Steven Maguire.

increase in the basic AMT exemption occurred in December 2007 with the enactment of
the Tax Increase Prevention Act of 2007 (TIPA, P.L. 110-166). Under provisions of this
act, the AMT exemption for 2007 was set at $66,250 for joint returns and $44,350 for
unmarried taxpayers. In addition, this act allows taxpayers to temporarily use
nonrefundable tax credits to offset AMT liability. In 2008, the basic AMT exemption is
scheduled to decrease to its prior law level of $45,000 for joint returns ($35,750 for
unmarried taxpayers), and nonrefundable tax credits will not be allowed to offset AMT
liability.
Because the temporary patches to the AMT expired at the end of 2007, in 2008
roughly 21 million more taxpayers will likely be subject to the AMT.⁵ An increase of this
magnitude will affect taxpayers in every state, regardless of whether taxpayers in that state
itemize and deduct their state/local taxes and/or miscellaneous deductions from their
federal tax returns.
For example, in 2006, 27,217 taxpayers in Tennessee were subject to the AMT.
Thus, Tennessee taxpayers accounted for only 0.66% of the total AMT returns filed in the
United States that year. However, if that percentage remains constant, and the temporary
patches to the AMT expire, then in 2008 up to 159,000 (0.66% times 24.156 million)
taxpayers in Tennessee could be subject to the AMT.
Table 3 shows the potential number of AMT returns by state in 2008 if the
temporary patches to the AMT are not extended. The CRS calculations are an
extrapolation based on the assumption that the ratio of AMT taxpayers in each state to
total AMT taxpayers in the entire country will remain the same in 2008 as it was in 2006.
The methodology makes assumptions that could be challenged, but still provides a
reasonable estimate of the potential impact of the AMT in 2008 absent legislative
changes. The House Ways and Means Committee has released projections of the number
of AMT taxpayers by congressional district. These projections can be found on the
committee’s website.⁶
The Joint Committee on Taxation estimates that the one-year AMT patch for 2008⁷

would reduce federal revenues by almost $61.5 billion over 10 years.
⁵ JCT, June 25, 2007.
⁶ The congressional district projections for number of AMT filers in 2008 are at the following
website: [http://waysandmeans.house.gov/MoreInfo.asp?section=46], visited July 15, 2008.
⁷ U.S. Congress, Joint Committee on Taxation, “Estimated Revenue Effects of H.R. 6275, the
‘Alternative Minimum Tax Relief Act of 2008,’ Scheduled for Markup by the Committee on
Ways and Means on June 18, 2008,” JCX-51-08, June 17, 2008.

CRS-4
Table 1. Number of Alternative Minimum Taxpayers by State, Tax Year 2005
(returns in thousands)
^nk^St^a^t^e^Num^b^{er of}^ret^urns^AM^{T ret}^urns^AM^{T ret}^{urns a}^s^{% of total}^Ra^nk^St^a^t^e^Num^b^{er of}^ret^urns^AM^T^ret^urns^AM^{T ret}^{urns a}^s^{% of total}
^U^.^S^.^A^.^135,258^4,068^3.01%
^A^l^abam^a^1,956²¹^1.07%³²^Mon^t^an^a⁴⁴⁸⁸¹^.79%
^A^l^as^k^a³⁴⁷³⁰^.86%²⁵^N^e^bras^k^a⁸¹⁶¹⁷^2.08%
^A^rⁱ^z^on^a^2,474⁴⁹^1.98%³⁸^N^e^v^a^da^1,150¹⁸^1.57%
^A^r^k^aⁿ^s^as^1,154¹⁷^1.47%²⁰^N^e^w^H^a^m^p^s^hⁱ^r^e⁶⁵⁰¹⁵^2.31%
⁶^C^a^lⁱ^f^ornⁱ^a^15,573⁷⁵⁷^4.86%¹^N^e^w^Jers^ey^4,153²⁸³^6.81%
^C^o^l^o^rado^2,160⁴⁶^2.13%⁴²^N^e^w^Mexⁱ^co⁸⁴³¹¹^1.30%
³^C^oⁿⁿ^ectⁱ^c^u^t^1,682⁹⁹^5.89%²^N^e^w^Y^o^rk^8,716⁵²³^6.00%
^D^e^l^a^w^a^re⁴⁰³⁹²^.23%¹⁸^N^o^rt^h^C^a^rolⁱⁿ^a^3,880⁹³^2.40%
⁴^Dⁱ^s^t^ri^ct^of^C^o^l^u^m^bⁱ^a²⁸²¹⁵^5.32%⁴⁶^N^o^rt^h^D^a^k^o^t^a³⁰⁷³⁰^.98%
ⁱ^{ki/CRS-RS22083}^F^l^ori^d^a^8,411¹⁶¹^1.91%¹²^O^hⁱ^o^5,460¹⁵²^2.78%^G^e^orgⁱ^a^3,918¹⁰²^2.60%⁴⁰^O^k^l^a^h^o^m^a^1,496²¹^1.40%
^g/w^H^a^w^aⁱⁱ⁶²¹¹⁴^2.25%¹¹^O^r^eg^on^1,645⁴⁸^2.92%
^s^.or
^le^ak^Idah^o⁶¹⁴¹²^1.95%¹⁴^Penⁿ^s^y^l^v^aⁿⁱ^a^5,867¹⁵⁴^2.62%³^I^llin^oⁱ^s⁵^,⁸³⁶¹⁵³²^.⁶²^%⁹^Rh^o^d^e^I^s^lan^d⁵⁰²¹⁷³^.³⁹^%
^://wiki^In^di^an^a^2,884⁴¹^1.42%³¹^S^o^u^t^h^C^a^rolⁱⁿ^a^1,885³⁵^1.86%
^h^ttp^Iow^a^1,347²²^1.63%⁵¹^S^o^u^t^h^D^a^k^o^t^a³⁶⁷³⁰^.82%
^K^aⁿ^s^as^1,242²⁶^2.09%⁴⁹^T^eⁿⁿ^e^s^s^ee^2,658²⁵^0.94%
^K^eⁿ^t^u^c^k^y^1,780³¹^1.74%³⁴^T^e^x^a^s^9,728¹⁷²^1.77%
^L^o^uⁱ^sⁱ^an^a^1,770²²^1.24%²⁹^U^t^ah^1,031¹⁹^1.84%
^Maiⁿ^e⁶²¹¹⁵^2.42%¹⁶^V^e^rm^on^t³¹⁰⁸²^.58%
⁵^Mary^l^aⁿ^d^2,674¹³⁴^5.01%⁸^Vⁱ^rgⁱⁿⁱ^a^3,541¹²⁴^3.50%
⁷^Mas^s^ach^u^s^et^t^s^3,083¹⁴⁶^4.74%³⁶^Was^hⁱⁿ^g^t^on^2,932⁵⁰^1.71%
^Mi^chⁱ^g^an^4,563⁹³^2.04%⁴⁵^Wes^t^Vⁱ^rgⁱⁿⁱ^a⁷⁵⁴⁹¹^.19%
^Miⁿⁿ^e^s^o^t^a^2,446⁷⁴^3.03%¹⁷^Wi^s^c^on^sⁱⁿ^2,656⁶⁵^2.45%
^Mi^s^sⁱ^s^sⁱ^ppi^1,170¹¹^0.94%⁴⁴^Wy^omⁱⁿ^g²⁴⁸³¹^.21%
^Mi^s^s^o^u^rⁱ^2,611⁴⁷^1.80%
^D^e^p^a^r^t^meⁿ^t^o^f^t^h^e^T^r^e^a^s^u^r^y^.^Iⁿ^t^e^rⁿ^a^l^R^e^v^eⁿ^u^e^S^e^r^vⁱ^c^e^,^a^v^aⁱ^l^a^b^l^e^a^t^[^h^t^t^p^:^/^/^www.ⁱ^r^s^.^u^s^t^r^e^a^s^.^g^o^v^/^p^u^b^/ⁱ^r^s^-^s^oⁱ^/⁰⁵ⁱⁿ⁵⁴^c^m.^x^l^s^]^,^vⁱ^sⁱ^t^e^{d Ju}^l^y^{15, 2008.}

CRS-5
Table 2. Number of Alternative Minimum Taxpayers by State, Tax Year 2006
^nk^St^a^t^e^Num^b^{er of}^ret^urns^AM^{T ret}^urns^AM^{T ret}^{urns a}^s^{% of total}^Ra^nk^St^a^t^e^Num^b^{er of}^ret^urns^AM^T^ret^urns^AM^{T ret}^{urns a}^s^{% of total}
^U^.^S^.^A^.^139,230,752^4,117,686^2.96%
⁴⁵^A^l^abam^a^2,028,820^23,864^1.18%³³^Mon^t^an^a^465,929^8,442^1.81%
⁴⁹^A^l^as^k^a^341,329^3,469^1.02%²⁶^N^e^bras^k^a^833,432^16,896^2.03%
²⁸^A^rⁱ^z^on^a^2,596,639^51,028^1.97%⁴⁰^N^e^v^a^da^1,210,794^18,198^1.50%
⁴³^A^r^k^aⁿ^s^as^1,184,565^16,828^1.42%²⁰^N^e^w^H^a^m^p^s^hⁱ^r^e^660,961^14,917^2.26%
⁶^C^a^lⁱ^f^ornⁱ^a^15,987,519^735,476^4.60%¹^N^e^w^Jers^ey^4,229,622^273,589^6.47%
¹⁸^C^o^l^o^rado^2,228,867^52,903^2.37%⁴⁴^N^e^w^Mexⁱ^co^887,176^11,833^1.33%
²^C^oⁿⁿ^ectⁱ^c^u^t^1,714,027^96,823^5.65%³^N^e^w^Y^o^rk^8,964,337^493,391^5.50%
¹⁹^D^e^l^a^w^a^re^412,049^9,628^2.34%¹⁷^N^o^rt^h^C^a^rolⁱⁿ^a^4,005,613^98,871^2.47%
⁴^Dⁱ^s^t^ri^ct^of^C^o^l^u^m^bⁱ^a^287,723^15,017^5.22%⁴⁷^N^o^rt^h^D^a^k^o^t^a^314,622^3,651^1.16%
ⁱ^{ki/CRS-RS22083}²⁹^F^l^ori^d^a^8,656,007^168,866^1.95%¹⁴^O^hⁱ^o^5,520,709^138,775^2.51%¹⁵^G^e^orgⁱ^a^4,075,882^102,159^2.51%³⁹^O^k^l^a^h^o^m^a^1,544,498^23,694^1.53%
^g/w²⁴^H^a^w^aⁱⁱ^638,212^13,428^2.10%¹¹^O^r^eg^on^1,695,185^48,753^2.88%
^s^.or
^le^ak²⁷^Idah^o^641,026^12,623^1.97%¹³^Penⁿ^s^y^l^v^aⁿⁱ^a^6,040,716^152,705^2.53%¹²^Illin^ois^5,979,694^160,305^2.68%⁹^R^h^{ode Is}^lan^d^516,906^15,705^3.04%
^://wiki⁴¹^In^di^an^a^2,969,013^43,228^1.46%³⁰^S^o^u^t^h^C^a^rolⁱⁿ^a^1,948,517^37,513^1.93%
^h^ttp³⁷^Iow^a^1,378,083^22,905^1.66%⁵¹^S^o^u^t^h^D^a^k^o^t^a^377,808^3,640^0.96%
²³^K^aⁿ^s^as^1,289,274^27,609^2.14%⁵⁰^T^eⁿⁿ^e^s^s^ee^2,742,268^27,127^0.99%
³⁸^K^eⁿ^t^u^c^k^y^1,822,852^28,172^1.55%³⁴^T^e^x^a^s^10,090,061^180,948^1.79%
³⁶^L^o^uⁱ^sⁱ^an^a^1,894,724^32,537^1.72%²⁵^U^t^ah^1,075,222^21,922^2.04%
²²^Maiⁿ^e^633,971^14,004^2.21%¹⁶^V^e^rm^on^t^319,131^7,933^2.49%
⁵^Mary^l^aⁿ^d^2,717,418^127,303^4.68%⁸^Vⁱ^rgⁱⁿⁱ^a^3,618,883^127,929^3.54%
⁷^Mas^s^ach^u^s^et^t^s^3,144,359^143,615^4.57%³²^Was^hⁱⁿ^g^t^on^3,017,975^54,697^1.81%
³¹^Mi^chⁱ^g^an^4,655,310^89,131^1.91%⁴⁶^Wes^t^Vⁱ^rgⁱⁿⁱ^a^770,261^9,056^1.18%
¹⁰^Miⁿⁿ^e^s^o^t^a^2,559,718^74,282^2.90%²¹^Wi^s^c^on^sⁱⁿ^2,737,590^61,727^2.25%
⁴⁸^Mi^s^sⁱ^s^sⁱ^ppi^1,234,286^13,931^1.13%⁴²^Wy^omⁱⁿ^g^257,852^3,703^1.44%
³⁵^Mi^s^s^o^u^rⁱ^2,720,684^48,385^1.78%
^D^e^p^a^r^t^meⁿ^t^o^f^t^h^e^T^r^e^a^s^u^r^y^.^Iⁿ^t^e^rⁿ^a^l^R^e^v^eⁿ^u^e^S^e^r^vⁱ^c^e^,^a^v^aⁱ^l^a^b^l^e^a^t^[^h^t^t^p^:^/^/^www.ⁱ^r^s^.^u^s^t^r^e^a^s^.^g^o^v^/^p^u^b^/ⁱ^r^s^-^s^oⁱ^/⁰⁶ⁱⁿ⁵⁴^c^m.^x^l^s^]^,^vⁱ^sⁱ^t^e^{d Ju}^l^y^{15, 2008.}

CRS-6
Table 3. Potential AMT Returns by State, Tax Year 2008
^P^o^t^e^nt^ia^{l AM}^{T ret}^urns^P^o^t^e^nt^ia^{l AM}^{T ret}^urns
^S^t^ate^A^M^T^retu^rⁿ^sⁱⁿ²⁰⁰⁶ⁱⁿ²⁰⁰⁸^S^t^ate^A^M^T^retu^rⁿ^sⁱⁿ²⁰⁰⁶ⁱⁿ²⁰⁰⁸
^(CRS)^(CRS)
^4,117,686^24,156,000
^abam^a^23,864^139,996^Mon^t^an^a⁸^,442^49,524
^as^k^a^3,469^20,351^N^e^bras^k^a^16,896^99,119
ⁱ^z^on^a^51,028^299,351^N^e^v^a^da^18,198^106,757
^k^aⁿ^s^as^16,828^98,720^N^e^w^H^a^m^p^s^hⁱ^r^e^14,917^87,509
^lⁱ^f^ornⁱ^a^735,476^4,314,598^N^e^w^Jers^ey^273,589^1,604,983
^l^o^rado^52,903^310,350^N^e^w^Mexⁱ^co^11,833^69,417
ⁿⁿ^ectⁱ^c^u^t^96,823^568,003^N^e^w^Y^o^rk^493,391^2,894,430
^l^a^w^a^re^9,628^56,482^N^o^rt^h^C^a^rolⁱⁿ^a^98,871^580,017
^s^t^ri^ct^of^C^o^l^u^m^bⁱ^a^15,017^88,096^N^o^rt^h^D^a^k^o^t^a^3,651^21,418
ⁱ^{ki/CRS-RS22083}^d^a^168,866^990,636^O^hⁱ^o^138,775^814,110
^g/w^orgⁱ^a^102,159^599,306^O^k^l^a^h^o^m^a^23,694^138,999
^s^.or^w^aⁱⁱ^13,428^78,774^O^r^eg^on^48,753^286,005
^le^ak^o^12,623^74,052^Penⁿ^s^y^l^v^aⁿⁱ^a^152,705^895,829
^ois^160,305^940,414^R^h^{ode Is}^lan^d^15,705^92,132
^://wiki^an^a^43,228^253,593^S^o^u^t^h^C^a^rolⁱⁿ^a^37,513^220,066
^h^ttp^a^22,905^134,370^S^o^u^t^h^D^a^k^o^t^a^3,640^21,354
ⁿ^s^as^27,609^161,965^T^eⁿⁿ^e^s^s^ee^27,127^159,138
ⁿ^t^u^c^k^y^28,172^165,268^T^e^x^a^s^180,948^1,061,514
^uⁱ^sⁱ^an^a^32,537^190,875^U^t^ah^21,922^128,603
ⁿ^e^14,004^82,153^V^e^rm^on^t^7,933^46,538
^l^aⁿ^d^127,303^746,811^Vⁱ^rgⁱⁿⁱ^a^127,929^750,483
^s^ach^u^s^et^t^s^143,615^842,503^Was^hⁱⁿ^g^t^on^54,697^320,875
^chⁱ^g^an^89,131^522,878^Wes^t^Vⁱ^rgⁱⁿⁱ^a^9,056^53,126
ⁿⁿ^e^s^o^t^a^74,282^435,768^Wi^s^c^on^sⁱⁿ^61,727^362,115
^s^sⁱ^s^sⁱ^ppi^13,931^81,725^Wy^omⁱⁿ^g^3,703^21,723
^s^s^o^u^rⁱ^48,385^283,846
^:^Calcu^l^atioⁿ^s^b^y^{CRS assu}^mⁱⁿ^g^th^{at th}^{e ratio}^o^f^A^M^T^tax^p^ay^ersⁱⁿ^each^{state to}^to^{tal A}^M^T^tax^p^ay^{ers in}^th^{e en}^{tire co}^uⁿ^t^ry^w^{ill r}^em^aiⁿ^t^h^{e s}^a^m^eⁱⁿ^{2008 as}ⁱ^t^w^a^sⁱⁿ²⁰⁰⁶^.
^{ected Nu}^m^b^{er of}^A^M^T^tax^p^ay^ersⁱⁿ^th^{e U.S. in}^{2008 are bas}^e^{d on}^{data f}^r^om^{U.S. C}^oⁿ^g^r^es^s^,^J^oⁱⁿ^{t C}^o^m^m^{ittee on}^T^a^x^a^tion^,^“^P^res^eⁿ^t^L^a^w^an^d^B^ack^g^r^o^uⁿ^d^Relatin^g^to^th^{e A}^lterⁿ^ativ^e
ⁱ^m^u^m^T^a^x^,^{” JC}^X^-^38-^{07, Ju}ⁿ^e^{25, 2007.}