Alternative Minimum Tax

Last Updated: December 30, 2017

Definition - What does Alternative Minimum Tax mean?

The alternative minimum tax is an alternative to standard tax rates. It only applies if a person's tax deductions are so numerous that it exempts them from paying almost any taxes. In such situations, the taxpayer pays the alternative minimum tax instead of what they would have owed otherwise.

Insuranceopedia explains Alternative Minimum Tax

The alternative minimum tax is designed mainly to target the very wealthy, although it does sometimes apply to those with smaller amounts of wealth.

Insurance-related deductions and income can reduce a persons overall taxable income. If this reduction is significant enough, they may be required to pay the alternative minimum tax.

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