The AMT has long been a confusing part of the US tax system. Established in 1982 to target 155 households, the AMT is a parallel tax code that eliminates a number of tax deductions and benefits, and creates a minimum amount of tax that now affects (above an income exemption) millions of families. Before 2013, the AMT exemption was not indexed to inflation.

Here are the basics of the AMT. For each filing status, after eliminating certain non-allowed tax deductions, the starting point for the AMT calculation is reduced by an exemption amount (see table below). However, depending on your AMT income, this exemption is “phased out” until it disappears (see phaseout ranges below)

 The exemptions exist so taxpayers don't result in paying 26% (or 28%) of their entire income, only on the income minus their exemption.

There are two tax rates for all non-corporate filers. The higher rate applies to AMT taxable income above the high AMT rate threshold. The 2014 numbers you need to know are in the following table.