How will the new tax rate on dividends affect AMT?

December 8, 2003

Subject:  AMT Tax
From:  George
Date:  Sat, 18 Oct 2003

With the new 15% max tax on dividends, what is the effect on the AMT? Will the tax on dividends remain at 15% or will they be taxed at the AMT rate of 26/28%?

Thanks,
George

Answer

Date:  31 Oct 2003

Hello George,

The 15% maximum income tax rate also applies when computing the alternative minimum tax. Since the income is subject to tax at the same rate, but certain deductions, including state income taxes, are not deductible for AMT, more taxpayers will be subject to AMT thanks to this tax change.

Good luck!
Mike Gray

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