Legal Definitions - alternative minimum tax

The Alternative Minimum Tax (AMT) is a type of tax that is imposed by the government on individuals, entities, transactions, or property to generate public revenue. It is an additional tax that is calculated separately from the regular income tax and is designed to ensure that high-income taxpayers pay a minimum amount of tax.

• If a taxpayer has a high income but has taken advantage of many tax deductions and credits, they may be subject to the AMT.
• A corporation that has a lot of tax breaks and deductions may also be subject to the AMT.

These examples illustrate how the AMT is designed to prevent high-income taxpayers from avoiding paying their fair share of taxes by taking advantage of tax breaks and deductions.