Tax Increase Prevention Act

The Tax Increase Prevention Act of 2007 extended some tax exemptions.

The Tax Increase Prevention Act of 2007, Public Law 110-166, was federal legislation signed Dec. 26, 2007 to extend through 2007 the increased exemption amount for the alternative minimum tax along with the offset of nonrefundable personal tax credits.

History

The Tax Increase Prevention Act of 2007, HR 3996, was introduced Oct. 30, 2007 by Rep. Charles Rangel, a New York Democrat, and referred to the House Ways and Means Committee. It passed the House on Nov. 9 by a 216-193 vote and passed the Senate on Dec. 6 by an 88-5 vote.

Alternative Minimum Tax

The Alternative Minimum Tax is a separately-figured tax that eliminates many deductions and credits. It applies when taxable income plus adjustments and preference items are more than the tax's exemption amount. HR 3996 extended the tax's limit for personal credits to 2007 and increased the exemption from $42,500 to $44,350 for individuals and from $62,550 to $66,250 for joint tax returns.

Impact

According to the National Association of Home Builders, the law provided a "temporary inflation fix" for 2007. It kept an additional 19 million people (three million in 2006 to 22 million in 2007) from having to pay the tax.

References

• HR 3996: Tax Increase Prevention Act of 2007
• Internal Revenue Service: Topic 556 Alternative Minimum Tax
• National Association of Home Builders