Q. I've heard I may have to pay more in federal income taxes for 2006 because of something called the Alternative Minimum Tax. Is this true?

A. If you're a middle-income taxpayer you may be only vaguely familiar with the Alternative Minimum Tax, a tariff which grew out of congressional outrage about a small group of millionaires who paid no income taxes in 1967.

The 1969 legislation and subsequent acts have tried to minimize the number of wealthy citizens who don't pay their fair share in taxes. But because of increasing incomes and congressional inaction on AMT changes, more middle-income people may find themselves subject to it for the 2006 tax year.

"This is one of those situations where politicians were out to get those tax evaders but it became one of those monsters that's come back to bite them," said Lowell Kalapa, head of the Tax Foundation of Hawaii.

Capitol Hill observers believe Congress most likely will act on AMT changes and extend larger income exemptions that have kept most people from paying the tax.

Without the bigger income exemptions, married taxpayers with two children and adjusted gross income of more than $67,890 may have to pay the AMT, according to the U.S. Treasury Department. Its projections show the number of people subject to the AMT would rise to 20.5 million for the 2006 tax year from 3.8 million in 2005.

Moreover, three out of every four taxpayers with income between $100,000 and $200,000 will be subject to the AMT when they file their 2006 tax returns next year if things remain unchanged, the Treasury Department has said. That's up from 13 percent in 2005.

How many Hawai'i taxpayers will be affected is difficult to say. In 2003, 7,000 out of the 591,000 returns filed from Hawai'i included an AMT filing, according to the Congressional Research Service, part of the Library of Congress.

The AMT actually operates alongside the regular income tax system and has its own tax base, exemption amounts and tax rates that start at 26 percent. Personal exemptions for taxpayers and their children, deductions for state taxes, and other itemized deductions are disallowed under AMT.

And unlike the regular system, the AMT isn't indexed for inflation, meaning as incomes creep higher, more people are subject to the tax.

As such they must calculate the AMT in addition to their regular income tax and pay whichever amount is larger.

More people are finding they must pay AMT, especially since federal tax cuts lowered what they would have paid under the regular income tax system.

Congress tackled the problem between 2001 and 2005 by enacting higher AMT income exemptions of $58,000 for married filers and $40,250 for others.

That temporary fix expired at the end of December with exemptions reverting to 2000 levels of $45,000 for married and $33,750 for unmarried.

So you may have to pay the AMT for the 2006 tax year depending on your income level and whether Congress changes the law this year.

A way to avoid delving into AMT is to have tax software do the work for you. Chances are the programs will pose a series of easily answered questions to determine whether it applies to you or not.

Kalapa believes Congress will address the issue before the end of the year. The President's Tax Advisory Panel on Tax Reform recently proposed repealing the AMT as part of its list of items to simplify taxes. Other bills in the Senate and House have proposed raising income exemptions above the levels that expired at the end of 2005.

"There will be enough political pressure to make Congress consider doing something," Kalapa said.

Gannett News Service contributed to this report.

Reach Greg Wiles at gwiles@honoluluadvertiser.com.