What Is the Corporate Alternative Minimum Tax?

Corporate alternative minimum tax offers an alternate means of computing taxes. There is a similar alternative minimum tax for personal income. Alternative minimum tax uses a broader definition of taxable income, with lower marginal rates. The corporate alternative minimum tax rate is a flat 20 percent.

Who Pays the Corporate Alternative Minimum Tax?

The purpose of the corporate alternative minimum tax rate is to keep larger corporations paying a minimum amount in taxes. Corporations are able to receive various deductions and can apply many tax loopholes to bring their tax rates down. The thinking behind the minimum tax is that it will lead to small business economic assistance and reduce the tax burden on smaller businesses. The personal alternative minimum tax targeted high-income families. The personal minimum tax held higher incomes accountable, and eased the burden on lower- and middle-income families. The corporate minimum tax aims to do the same thing.

To determine who pays the tax, a C corporation is required to calculate both the corporate alternative minimum tax and the regular tax. Whichever tax is higher is the tax they are required to pay. For more information about the corporate alternative minimum tax, contact a tax professional with experience in filing taxes for large companies.
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