The Alternative Minimum Tax (AMT) was introduced back in 1969 and acts as a method for the government to tax wealthy people who would normally have ways of lowering their tax burden through special channels. People who end up paying the AMT learn that they cannot deduct common things such as property taxes, investment advisory fees, tax preparation costs, medical expenses below 10% of their adjusted gross income, and so on.

For many years, lawmakers in both parties have acknowledged the unfairness of the AMT. Because of the inflation and the complexity of the U.S. tax code, many Americans that do not fall into the category of ‘wealthy’ have been caught in the AMT snare. But because a permanent fix was always deemed ‘too costly’, Congress has instead passed a series of patches every couple of years.

In 2012, lawmakers finally decided to make some permanent changes to the AMT. As part of the American Taxpayer Relief Act of 2012 (otherwise known as the Fiscal Cliff deal), Congress raised the AMT exemption for 2012 and added permanent indexing to adjust for inflation.

Changes to the AMT are projected to cost the government an estimated $1.8 trillion in true revenue over the next 10 years. However, this figure is misleading because chances are Congress would have continued to pass temporary fixes anyway, so the government likely would have never seen most of that revenue.

Here’s how the changes to the AMT will affect taxpayers for 2012 and subsequent years:

• The AMT will exempt an additional 30 million Americans for tax year 2012, leaving 4 million taxpayers still subject to it.

• In 2013, the number of Americans subject to the AMT will be reduced from 27 million to 3.4 million.

• Other changes resulting from the Fiscal Cliff deal such as the return of the top marginal rate up to 39.6% will push many higher-income Americans off the AMT.

• In future years, the non-partisan Tax Policy Center projects that only 4% of Americans will be subjected to the AMT on an annual basis.

Though not perfect, the American Taxpayer Relief Act of 2012 went a long way toward protecting most taxpayers from the AMT. Still, there will be some Americans caught in this tax bracket that really don’t deserve to be there. The best solution would be complete repeal of the AMT (and greater simplification of the tax code as a whole), but this is not likely to happen in today’s polarized political environment.