Final answer:
The Alternative Minimum Tax rate for individuals is D. 20%. It is a separate system from marginal tax rates and is intended to ensure that high-income taxpayers contribute a minimum amount of tax regardless of their regular income tax calculations.
Step-by-step explanation:
(D) 20%. The AMT was created to ensure that high-income taxpayers pay at least a minimum amount of tax, even if they have significant deductions that lower their regular income tax liability.
The AMT has its own set of rates and rules that sit parallel to the regular federal income tax system. The AMT tax rates are not the same as the marginal tax rates, which for a single taxpayer can range from 10% to 35% depending on their income. Instead, the AMT rate is a flat rate applied to AMT income over a certain exemption amount. This system is designed to limit the impact of certain tax benefits that can lower a taxpayer's regular tax amount. The average tax rate refers to taxes paid divided by total income, which may be different than both marginal and AMT rates.