Each year, the IRS releases tax return statistics for returns filed for the prior tax year. Data is released throughout the year as more returns are processed and represent tax return information that has been gathered through late-May, mid-July, and mid-November.
Although these numbers are not as thorough as the Statistics on Income tables, unlike those tables, filing season data is not released with a two- to three-year delay. The real-time nature of this data gives researchers an early opportunity to analyze some effects of the Tax Cuts and Jobs Act (TCJA) compared to prior law.
One of the most substantial changes to the individual income tax was the overhaul of the alternative minimum tax. These changes—such as an increased exemption and income phaseout—were predicted to lower the number of AMT payers from roughly five million to somewhere between 200,000 and 500,000 (decreases of 96% and 90%, respectively).
As of mid-July 2019 (mid-November data is yet to be released), AMT returns were down 98.1% (-4.0 million), year-over-year. If the usual 22.4% increase in AMT returns occurs between July and November, the final statistics will show a decline in AMT payers of 4.9 million between 2017 and 2018.
Not only has the number of taxpayers that face the AMT declined dramatically, but so too has the distribution of total AMT paid. In 2017, taxpayers making between $100,000 and $500,000 accounted for 74.4% of AMT receipts. That figure fell to 35.1% in 2018. Those making greater than $1 million paid 6.8% of total AMT receipts in 2017, compared to 46.9% for tax year 2018.
The AMT was originally designed to be highly progressive, “catching” only the wealthiest taxpayers. After decades of the tax burden falling further down the income scale, it appears the TCJA has restored some of that progressivity.