AMT and Business Tax Credits
For taxpayers eligible to pay their regular tax, tax credits may be applied, but only within limits. In general, business tax credits cannot exceed the greater of the following:
• the difference between the taxpayer’s regular income tax liability and the tentative minimum tax. In other words, credits cannot be allowed to reduce taxes below the AMT liability.
• 25% of the regular tax liability in excess of $25,000
Tax credits are not allowed to cause taxable income to fall below the alternative minimum taxable income.
The rehabilitation and low-income housing tax credits are two of the business c