Bill Proposes Scrapping Corporate Minimum Tax Starting 2025

A new piece of legislation, titled the "Book Minimum Tax Repeal Act," aims to eliminate the Corporate Alternative Minimum Tax (AMT) for tax years beginning after December 31, 2024. This tax was designed as a backstop to ensure large, profitable corporations pay at least a certain amount of federal income tax, regardless of deductions and credits. The bill achieves this primarily by amending Section 55 of the Internal Revenue Code, effectively removing corporations from the AMT calculation framework.

Uncorking the Corporate Tax Code

The core change here is the repeal of the Corporate AMT. Think of the AMT as a parallel tax system; corporations calculate their tax liability under the regular rules and under the AMT rules, paying whichever amount is higher. This bill proposes to remove that second calculation entirely for corporations by amending Section 55 and setting their tentative minimum tax to zero via changes to Section 38(c)(6)(E). The immediate effect? Corporations that were previously paying the AMT because their liability under that system was higher could see their overall federal tax bill decrease starting in 2025. This tax often impacts companies with significant differences between their financial statement income (the profit reported to shareholders, sometimes called 'book income') and their taxable income calculated under regular tax rules.

Adjustments Beyond the Big Companies

While the headline grabber is the corporate tax change, the bill also tweaks the individual Alternative Minimum Tax calculation under the amended Section 55. It sets new brackets for calculating the tentative minimum tax for individuals: 26% on taxable excess up to $175,000 and 28% on the excess above that amount (with the threshold halved for married individuals filing separately). This part of the bill directly impacts higher-income individuals subject to the AMT, potentially changing their tax liability separate from the corporate repeal. The legislation also includes several 'conforming amendments' – essentially technical updates to other parts of the tax code (like Sections 11(d), 53, 59, etc.) to ensure consistency now that the Corporate AMT is proposed to be removed.

The Bottom Line: Potential Shifts in Tax Burden

The central debate sparked by this kind of proposal often revolves around fairness and economic impact. Removing the Corporate AMT could mean lower tax bills for some large corporations. Proponents of such measures often argue this frees up capital for investment, job creation, or higher wages. However, the AMT was originally put in place to address situations where profitable companies paid little or no federal income tax. Repealing it removes that guardrail, potentially lowering overall corporate tax revenue and shifting more of the federal tax burden elsewhere. It raises the question: should there be a minimum floor for corporate taxes, and if so, what should it look like? This bill answers by proposing to remove the current one.