An estimated 73% of middle-class families would be hit with the dreaded alternative minimum tax if Congress doesn't act to fix the tax code. According to the New York Times, the latest Senate bill would not fix the problems surrounding the alternative minimum tax (or AMT, as it's known in the tax world). The AMT is a second tax rate system that runs in parallel with the regular income tax. Taxpayers pay the higher of the regular tax or AMT. For the vast majority of taxpayers, the regular tax is higher, and so the alternative minimum tax never shows up on their tax return. The AMT is difficult to calculate, and disallows most income tax deductions, such as mortgage interest and state taxes. This ends up affecting upper-middle-income and affluent families the most. In 2006, the AMT standard deduction falls from $40,250 for single filers ($58,000 for married people filing jointly) to $33,750 for single filers ($45,000 for married filing jointly). This will push more taxpayers into the AMT, causing many to pay more tax than they are accustomed to paying.

• Hmmm. What's This Alternative Tax? Hey, Wait! Ouch! - New York Times (free registration required)
• Understanding the Alternative Minimum Tax