Each year a taxpayer must calculate and then pay the greater of an alternative minimum tax (AMT) or regular tax. Effectively for high-income earners who mitigate their tax position from the day-to-day income tax, an end of year consolidation of all taxable income is requested and submitted. This is then paid in arrears (from the normal payroll income tax) less any allowable deductions. For many taxpayers, the effective marginal tax rates are 0% (exemption), 26% (low bracket), 28% (high bracket), 32.5% (low bracket with exemption phase-out), and 35% (high bracket with exemption phase-out), with increasing taxable income as modified for AMT. As with regular federal income tax, rates and exemptions vary by filing status. The lower rate and the exemption are phased out above certain income levels at 25% of AMT income. A lower rate applies to capital gains (and qualifying dividends).