Both houses of Congress appear to have reached a deal on a $70 billion package of tax cuts, according to published reports.

The agreements reportedly in place would extend President Bush's tax cuts on capital gains and dividends for two years and avoid more than an estimated 18 million middle-income taxpayers from getting hit by the alternative minimum tax.

Joint Committee on Taxation negotiators have agreed in principle to the Senate's more generous proposal for Alternative Minimum Tax relief in the pending reconciliation bill, lowering the number of returns affected by AMT by 1.5 million less than the House version.

The House proposal would extend, for this year, the 2005 exemption amount of $40,250 ($58,000 in the case of a joint return). The Senate proposal would increase the exemption amount for 2006, to $42,500 ($62,550 in the case of a joint return) and allow nonrefundable personal credits against the AMT.

Without the relief package, 18.9 million returns would be impacted by AMT in 2006. The House proposal reduces this to 5.1 million, while the Senate proposal would reduce the total to 3.6 million returns.

Sen. Chuck Grassley, chairman of the Senate Finance Committee, has pushed for the Senate's version of AMT relief. Grassley made the following comment on partisan criticism of the agreement in principle.

"Some members on the other side of the aisle are criticizing the agreement in principle before the ink is even dry. I want to remind them that about half of the net tax relief in the package, $34 billion, goes to keeping more than15 million taxpaying families out of the AMT. If we don't pass this package, their phones will ring off the hook with angry constituents. They understand the need for AMT relief, and they need to be intellectually honest about it."

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access