The U.S. Senate yesterday overwhelmingly passed a tax bill protecting millions for the alternative minimum tax, but leaving out a provision that would have increased taxes on hedge fund and private equity managers by billions.

By a vote of 88-5, the Senate approved a measure sparing about 20 million taxpayers from the AMT, which would have increased their tax bill by an average of $2,000. But unlike the House of Representatives bill passed last month, it does not include provisions doubling the tax rate on carried interest, or increasing taxes on deferred offshore compensation.

Rep. Charles Rangel (D-N.Y.), the chairman of the powerful House Ways and Means Committee and the sponsor of the House bill, said yesterday he would not oppose dropping the carried-interest provision. But he suggested he would fight for the offshore compensation tax hike in conference committee, which will seek to iron out the difference between the bills.

“The House will consider these amendments so that we may give the Senate another chance to do the right thing and pass responsible AMT relief,” Rangel said. Rangel’s counterpart in the Senate, Sen. Max Baucus (D-Mont.), said he was “disappointed” that the House bill didn’t pass the Senate, “but I’m not sorry for choosing to protect taxpayers from the AMT.”

Upon taking control of Congress in last year’s midterm elections, House Democrats instituted pay-as-you-go rules requiring that any new spending or tax cut be offset by a concomitant rise in revenue. The Senate bill does not meet this requirement, while the House bill would have used some $48 billion in new taxes on alternative investments managers to do so.