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Under the tax law, certain tax benefits can significantly reduce a taxpayer's regular tax amount The alternative minimum tax (AMT) applies to tax payers with high economic income be setting a limit on those benefits. It helps to ensure that those taxpayers pay at least a minimum amount of tax.

How is the AMT calculated?

Computing taxable income eliminating or reducing certain exclusion and deductions, and taking into account differences with respect to when certain items are taken into account in computing regular taxable income and alternative minimum taxable income.
Subtracting the AMT exemption amount
Multiplying the amount computed in 2 by the appropriate AMT tax rates
Subtracting the AMT foreign tax credit

The Law sets the AMT exemption amounts and AMT tax rates. Taxpayers can use the special capital gain rates in effect for the regular tax if they are lower than the AMT tax rates that would other wise apply. In addition, some tax credits that reduce regular tax do not reduce AMT tax liability.