AMT exemption

The Alternative Minimum Tax (AMT) exemption allows some taxpayers to reduce their taxable income when calculating their AMT. The AMT is designed to ensure that individuals with higher incomes pay a minimum level of tax, regardless of deductions and credits. The exemption amount varies based on filing status and phases out for higher earners. Essentially, it establishes a threshold below which taxpayers won't be subject to AMT, ensuring that they are not unfairly taxed due to certain tax benefits they may claim under the regular tax system.