The House yesterday signed off on a $3.1 trillion budget resolution containing a provision that would relieve about 20 million taxpayers from the alternative minimum tax for another year.
By a vote of 214 to 210, the House followed the lead of the Senate, which also passed the budget resolution by a narrow margin. On Wednesday, the upper chamber approved the bill by a vote of 48 to 45.
The bill, which represents a compromise between the House and Senate, contains a $1,000 per child tax credit, an extension of the state and local sales tax deduction, and a tax credit for school construction bonds, in addition to the AMT relief.
The school construction tax credit bonds could be used to finance new facilities, and would offer a tax break instead of tax-exempt interest payments. Currently, state and local governments can issue up to $400 million a year of qualified zone academy bonds, which are taxable tax-credit bonds used to finance repairs and renovations of existing school facilities.
The AMT, which applies to interest earned on private-activity bonds and some governmental and 501(c)(3) bonds, is not indexed to inflation and, as a result, more and more taxpayers become subject to it each year. To address the matter, lawmakers have passed temporary "patches" to the bill in the past, preventing unintended taxpayers from being forced to pay it.
The resolution - which is nonbinding and will not be signed into law by the president - is meant to serve as a guide for committees and lawmakers by establishing the maximum amount that can be spent in categories, such as defense and health care.