Corporate Tax Rate Reduction and Corporate AMT Eliminated

Businesses have many reasons to celebrate the new Tax Cuts and Jobs Act. Key among these reasons are the establishment in the new law of the top corporate tax rate at 21% and the elimination of the corporate Alternative Minimum Tax (AMT), for tax years beginning after December 31, 2017.

Taken together, it may be possible for some businesses to lower their effective tax rates below 21% if various deductions can also be taken, the benefit of which may have otherwise been eliminated or reduced if the AMT were still in effect.

For tax years beginning after 2017 and before 2022, businesses having AMT credits should be able to use them to offset their regular tax liability in an amount equal to 50% (100% in tax years beginning in 2021) of the excess of the minimum tax credit for the tax year over the amount of the credit allowable for the year against regular tax liability. The full amount of the minimum tax credit will be allowed in tax years beginning before 2022.

NOTE: AMT for individual taxpayers has not been eliminated.

 

 


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