The Baucus amendment allows credits, and increases the exemptions taxpayers can claim to avoid paying the AMT in 2007, which will prevent the tax, dubbed a “stealth tax” by many lawmakers, from applying to those who didn’t pay it last year. The amendment, which does not include offsets for the cost of AMT relief this year, passed after a House bill containing offsets failed to win sufficient votes, and after numerous minority objections before and after the Thanksgiving recess to requests for various votes on the AMT.

The AMT was created in 1969 to keep wealthy people from avoiding taxes altogether, but has started to hit working families instead. Baucus is a proponent of full repeal of the alternative minimum tax, and introduced legislation earlier this year to do so.

“Protecting working families from the alternative minimum tax is one of my top tax priorities this year. The legislation the Senate has now passed will keep millions of Americans from falling victim this year to a tax they were never meant to pay. And it remains my goal to repeal AMT altogether,” he announced following the vote.

He continued: “I’m disappointed that the votes weren’t there to pay for this bill, but I’m not sorry for choosing to protect taxpayers from the AMT even at some cost. Too many folks are at risk of an unfair tax increase if Congress fails to act on the AMT. Now I plan to work with the House to end this drawn-out process on the AMT, and to get this tax relief signed into law as quickly as possible."

Senate approval of the measure represents a big step forward in preventing millions having to file under the AMT for 2007, but must still be reconciled with House proposals. Also, Congress has now missed the deadline set by the IRS for any changes in the law to be reflected in its new tax forms, which have already been sent to the printers. This means that the 2008 tax filing season promises to be one of the most chaotic and confusing ever, and the Treasury department has warned that millions of taxpayers face delays in the processing of their tax returns and the receipt of valuable tax credits.

Baucus lays the blame for this delay squarely at the door of the Republican minority, which has insisted on an AMT fix unaccompanied by offsetting tax hikes.

"We tried to save those 19 million families from the AMT on November 15, when the Majority Leader asked consent to do so. We tried to save those 19 million families from the AMT on repeated occasions this week. Most recently, today we tried to save those 19 million families from the AMT by moving to the House-passed bill. And when the other side blocked us, we tried to save those 19 million families from the AMT by asking consent to pass the legislation that we have before us now. But at every step, the Republican Caucus objected," Baucus remarked in his floor statement.

"I am gratified that at long last, the Republican Caucus has agreed to let us act now. Perhaps the third time is a charm. Or the fourth. Or the fifth. And so I will support this effort to save those 19 million families from the AMT. The bill before us is plainly not my first choice of how to do so. But this is our best choice to do so," he added.

According to Baucus, if Congress fails to act on this issue, nearly two and a half million families with incomes of less than $75,000 will have to pay the AMT next year, in addition to five million families with incomes between $75,000 and $100,000, and 12 million families with incomes between $100,000 and $200,000.