What is the primary purpose of the alternative minimum tax (AMT)?

The primary purpose of the alternative minimum tax (AMT) is to ensure that high-income taxpayers do not significantly reduce or eliminate their tax liability through various deductions and credits available in the regular tax system. The AMT is designed to create a minimum tax level that individuals must pay regardless of their use of certain tax benefits.

This means that even if taxpayers have a high number of deductions or exemptions that would normally reduce their taxable income, the AMT limits the extent to which they can benefit from those deductions. By doing so, it ensures that wealthy individuals contribute a fairer share of taxes based on their actual economic capacity, aligning with the principle of tax equity. The AMT operates independently of the regular tax calculations, offering a parallel tax system aimed at preventing tax avoidance strategies that exploit loopholes in the tax code.