A parallel federal tax on taxable income as adjusted for specific deductions and tax-preference items, such as passive losses from tax shelters and interest paid on certain municipal bonds. The intent of the AMT is to ensure that nearly all individuals, especially those with high gross incomes, much of which is sheltered under normal reporting, pay at least some tax. The AMT was designed without automatic inflation adjustments, resulting in the tax impacting increasing numbers of middle-income taxpayers. Also called minimum tax. See also private activity bond.