AMT Muni Funds Are Worth a Look
Tax law changes could create new opportunities for muni investors.
American taxpayers experienced the full weight of the Tax Cut and Jobs Act on their tax bills for the first time beginning in April 2019. One of the changes that garnered less attention during last year’s reform debate, yet likely had significant implications for millions this year, was the reform package’s treatment of the Alternative Minimum Tax, or AMT. Under the Internal Revenue Code, the AMT is a separate tax calculation that certain high-income earners are required to make when computing their final tax bill. It includes a unique tax-rate structure and eliminates many deductions and credits permitted by the traditional tax calculation, often creating a larger bill for those who qualify for it.
In recent years, more folks found themselves subject to the AMT; prior to 2018, the Tax Policy Center estimated that more than 5 million taxpayers fell into this group. However, 2018’s tax reforms included, among other things, higher amounts for earned income that would be exempt in the AMT calculation and with that, the number of individual filers subject to the AMT was estimated to drop. Moving forward, it was estimated that 200,000 individual taxpayers would be subject to the AMT, and corporations are no longer exposed to AMT liabilities.
Elizabeth Foos does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.