AMT Calculator — Alternative Minimum Tax
Check if you owe Alternative Minimum Tax for the 2025 or 2024 tax year. Enter your income, deductions, and AMT preference items like SALT deductions and incentive stock options to see your regular tax vs. AMT comparison.
Regular Tax
$37,067Tentative Minimum Tax
$27,599AMT Owed
$0Total Tax
$37,067| Item | Amount |
|---|---|
| Regular Taxable Income | $184,250 |
| + AMT Preference Items | $10,000 |
| AMT Income (AMTI) | $194,250 |
| - AMT Exemption | $88,100 |
| AMT Base | $106,150 |
| Tentative Minimum Tax | $27,599 |
| - Regular Tax | $37,067 |
| AMT Owed | $0 |
| Total Tax (Regular + AMT) | $37,067 |
How the Alternative Minimum Tax works
AMT is a parallel tax computed alongside your regular federal income tax, codified at IRC §55 through §59. You compute regular tax under the seven graduated brackets (10/12/22/24/32/35/37%) AND you compute Tentative Minimum Tax under the AMT system — then owe whichever amount is higher. The AMT system disallows several deductions the regular system allows (state and local tax, miscellaneous itemized, the standard deduction itself), adds back certain "preference" items, and taxes the resulting AMTI at flat rates of 26% below $239,100 of taxable AMTI and 28% above that (2025; $244,500 for 2026 under Rev. Proc. 2025-32).
The AMT exemption — analogous to the standard deduction but only inside the AMT calculation — shields a large slug of AMTI from tax entirely. For 2025 that's $88,100 for single filers and $137,000 for MFJ. The exemption itself phases out at 25% per dollar of AMTI above the filing-status threshold ($626,350 single / $1,252,700 MFJ for 2025), so very high-income filers lose the shield entirely and pay 26%/28% on essentially every dollar of AMTI.
AMT is computed on Form 6251 and reported on Schedule 2 of Form 1040. The IRS publishes the official Topic 556 walkthrough; for the underlying methodology see Form 6251 instructions.
AMT exemption + phaseout — 2024 through 2026
The exemption is the AMT analog of the standard deduction. It rises with inflation each year via IRS revenue procedure. OBBBA §70105 separately reset the phaseout STARTING points beginning 2026 — the exemption amounts kept indexing but the income level at which the exemption begins to vanish dropped sharply.
| Filing status | 2024 exemption | 2025 exemption | 2026 exemption | 2025 phaseout start | 2026 phaseout start |
|---|---|---|---|---|---|
| Single / HoH | $85,700 | $88,100 | $90,100 | $626,350 | $500,000 |
| Married Filing Jointly | $133,300 | $137,000 | $140,200 | $1,252,700 | $1,000,000 |
| Married Filing Separately | $66,650 | $68,500 | $70,100 | $626,350 | $500,000 |
Sources: Rev. Proc. 2023-34 (2024), Rev. Proc. 2024-40 (2025), Rev. Proc. 2025-32 §3.06 (2026). OBBBA §70105 amended §55(d)(4) to lower the 2026 phaseout starts from the TCJA-indexed level (~$626,350 single / ~$1,252,700 MFJ) back toward $500,000 / $1,000,000. Exemption fully phased out when AMTI exceeds the threshold by 4× the exemption amount: 2025 single = $978,750, 2025 MFJ = $1,800,700.
What gets added back — AMT preference items
The AMT system disallows or reverses certain deductions and adjustments from the regular calculation. The most consequential add-backs, drawn from Form 6251 lines 2a–3:
State and local taxes (SALT)
Your ENTIRE SALT deduction is added back — not just the amount above the regular SALT cap. In 2025 the regular cap is $40,000 (OBBBA §70120, phasing down to $10,000 above $500,000 MAGI). AMT gives you zero SALT deduction regardless of the regular-tax cap.
Incentive stock options (ISO)
The bargain element on ISO EXERCISE (FMV − strike × shares) when held past calendar year-end is added to AMTI — phantom income with no regular-tax counterpart. Disqualifying dispositions in the same year reverse this. Tracked on Form 3921. The stock options calculator models the year-by-year exposure.
Standard deduction
If you took the standard deduction on the regular return, it gets added back to AMTI. AMT effectively requires you to itemize for its own calculation — though the AMT exemption replaces the shield that the standard deduction provided.
Private activity bond interest
Most municipal bond interest is exempt from both regular tax and AMT, but interest from certain private activity bonds (PABs, the muni subset used for non-government projects) is tax-exempt for regular tax YET added to AMTI. Check bond prospectuses for "AMT" flag.
Accelerated depreciation
For property placed in service before 1999, regular MACRS depreciation exceeded AMT's slower method, creating an add-back. Most modern assets are now equivalently treated, so this is a small line for most filers.
Miscellaneous 2% itemized
Pre-TCJA, unreimbursed employee expenses, tax-prep fees, and investment advisor fees were deductible above a 2%-of-AGI floor and added back for AMT. TCJA suspended those deductions for regular tax through 2025, so the AMT add-back is currently moot — but the line reappears if Congress restores the deduction.
Worked examples — when AMT actually bites
Four representative 2025 cases. AMT only "wins" when Tentative Minimum Tax exceeds regular tax; below those breakpoints the regular calculation controls and the AMT analysis is a wash.
High-W2 dual earners, no ISO, low SALT
MFJ, $450k wages, $25k SALT, standard deduction-equivalent. AMTI ≈ $425k, well below the $1,252,700 phaseout. Exemption $137,000 intact; AMTI − exemption = $288k. AMT @ 26%/28% ≈ $77k; regular tax ≈ $97k. Regular tax wins — no AMT owed.
ISO exerciser with $300k bargain element
Single, $200k W-2, exercises and holds ISO with $300k bargain element. AMTI = $200k + $300k − std ded add-back = $515k. Exemption $88,100 phases out: AMTI excess over $626,350 is $-111k (still under threshold) → full exemption preserved. AMT @ 26%/28% on ~$427k ≈ $115k; regular tax ≈ $37k. AMT owed: ~$78k extra. Generates AMT credit for future recovery.
$800k MFJ, NY/CA-style SALT
MFJ, $800k AGI, $70k SALT paid (capped at $40,000 for regular tax). AMTI add-back of full $70k. AMTI ≈ $830k, phaseout begins $1,252,700: ~no excess in 2025, but in 2026 with the lower $1,000,000 phaseout start, AMTI excess = $-170k → still under. No AMT in 2025-26. Same MFJ at $1.5M income in 2026 with full SALT add-back would see meaningful exemption phaseout under the new $1,000,000 threshold.
Retiree, $300k Roth conversion + LTCG
Single retiree, $50k SS + $300k Roth conversion + $200k LTCG. Regular tax computed; LTCG keeps preferential rates. For AMT, AMTI ≈ $510k; AMTI over $626,350 phaseout start = $-116k. Exemption preserved. LTCG keeps its 15/20% rate inside AMT. Regular tax usually wins because LTCG is shielded both ways.
Planning levers to manage AMT exposure
- Time ISO exercises. If you exercise and hold past December 31, the bargain element hits AMTI. Splitting exercises across two tax years, or doing a "same-day sale" disqualifying disposition, can avoid AMTI add-back. Model both scenarios on Form 6251 BEFORE pulling the trigger.
- Recover the AMT credit. AMT paid on deferral preferences (mainly ISO bargain) creates a Minimum Tax Credit on Form 8801 carried forward indefinitely. In years your regular tax exceeds tentative minimum tax, apply the credit dollar-for-dollar.
- Avoid AMT-flagged municipal bonds. Some private activity bonds carry tax-exempt regular-tax interest but ARE counted as AMT preference. Brokers tag these "AMT" or "subject to AMT" — check before buying if you're close to the AMT line.
- Watch the 2026 phaseout cliff. OBBBA §70105 lowered the 2026 exemption phaseout starts to $500,000 single / $1,000,000 MFJ — well below the TCJA-era $626,350 / $1,252,700. Filers in the $500k–$1M zone with high SALT or large ISO positions will see AMT exposure jump in 2026.
- Bunch SALT into a single year. Pre-OBBBA when the SALT cap was $10,000, this had limited AMT benefit (entire SALT was added back regardless). Now that the regular cap is $40,000, pre-paying property tax in the second half of December still doesn't help AMT but can reduce regular tax — neutral or slightly negative for the AMT comparison.
- Use the calculator above for "what-if" timing. Model the same income with vs without an ISO exercise, with vs without a Roth conversion, or with vs without state-tax pre-payment, and read off the regular tax / TMT / AMT-owed figures.
Common AMT mistakes
- Forgetting to file Form 6251 when ISOs vest. The IRS receives Form 3921 from your employer showing each ISO exercise. If your 1040 doesn't include Form 6251 with the matching bargain element, expect a CP2000 notice.
- Confusing "AMT" with "Additional Medicare Tax (0.9%)". They're entirely different — Additional Medicare is a 0.9% wage/SE surtax on income above $200k single / $250k MFJ (Form 8959). AMT is the parallel 26/28% tax system. Both can hit the same return.
- Ignoring AMT credit recovery. Filers who paid five-figure AMT on an ISO exercise sometimes forget the MTC exists. Pull Form 8801 from your prior return; the carryforward is permanent and the credit can be substantial.
- Treating LTCG as AMT-rate income. Long-term capital gains and qualified dividends retain their 0/15/20% preferential rates inside the AMT calculation. LTCG raises AMTI (and can phase out the exemption) but is not taxed at 26%/28%.
- Assuming AMT is dead post-TCJA. True for most W-2 earners 2018-2025, but OBBBA's 2026 phaseout reset + expanded SALT cap revives AMT risk for the $500k–$2M income tier with concentrated stock or high-tax-state residency.
Frequently asked questions
What is the Alternative Minimum Tax?
The AMT is a parallel tax under IRC §55-§59 designed so that high-income filers with large preference items still pay a minimum federal tax. You compute regular tax AND tentative minimum tax, then owe whichever is higher. AMT uses two flat rates — 26% on the first $239,100 of AMTI above the exemption and 28% above that — and disallows the SALT deduction, miscellaneous itemized deductions, and the standard deduction.
What is the AMT exemption for 2025 and 2026?
For 2025: $88,100 single / HoH and $137,000 MFJ (Rev. Proc. 2024-40 §3.06). For 2026: $90,100 single / HoH and $140,200 MFJ (Rev. Proc. 2025-32 §3.06). The exemption phases out at 25% per dollar of AMTI above $626,350 (2025 single) / $1,252,700 (2025 MFJ) under §55(d)(3) — and OBBBA §70105 LOWERED the 2026 phaseout starts to $500,000 / $1,000,000, pulling more high earners back into AMT.
Who is most likely to owe AMT after TCJA and OBBBA?
Post-TCJA (2018+) and through 2025, very few wage earners owe AMT — the exemption is large and the SALT cap was only $10,000, so the regular tax usually exceeds the tentative minimum tax. OBBBA raised the SALT cap to $40,000 for 2025 (phasing out above $500,000 MAGI down to a $10,000 floor) — but it ALSO lowered the AMT phaseout starts. Net effect for 2026+: filers with $500k-$1M of income, large state/local tax, and ISO exercises are back at meaningful AMT risk.
What are AMT preference items?
Per Form 6251 line items, the main add-backs are: state and local income/property tax (the entire deduction, not just the post-SALT-cap amount), miscellaneous itemized deductions (2% floor items, suspended through 2025 under TCJA), the bargain element from exercising incentive stock options (ISOs) and holding past year-end, certain private activity bond (PAB) interest, accelerated depreciation in excess of straight-line, and incentive stock option dispositions before the holding period.
How does AMT work with ISO stock options?
When you EXERCISE an ISO and HOLD past calendar year-end, the bargain element (FMV − strike price × shares) is added to AMTI even though there's no regular-tax event. This is the biggest AMT trap: you owe tax on phantom income before any sale. If the stock then drops, you can be stranded paying AMT on gains that no longer exist. The 26%/28% you pay generates an AMT credit (Form 8801) carried forward indefinitely — recoverable in future years when regular tax exceeds tentative minimum tax. See /stock-options-calculator/ for a year-by-year ISO model.
How is AMT calculated step-by-step?
Step 1: start with regular taxable income and add back AMT preference items to get AMTI. Step 2: subtract the AMT exemption (phased out at 25% per dollar of AMTI above the threshold). Step 3: apply 26% to the first $239,100 of the remainder (2025), then 28% above that. Step 4: subtract any foreign tax credit allowed for AMT. The result is your Tentative Minimum Tax (TMT). Step 5: AMT owed = max(0, TMT − regular tax). You file Form 6251 with your 1040.
Did OBBBA change the AMT?
Yes. OBBBA §70105 (P.L. 119-1) amended IRC §55(d)(4) by LOWERING the AMT exemption phaseout starting points beginning 2026 — back toward pre-TCJA territory ($500,000 single / $1,000,000 MFJ versus $626,350 / $1,252,700 under TCJA). The exemption amounts themselves continue inflation indexing (Rev. Proc. 2025-32 §3.06). Combined with OBBBA's expanded SALT cap ($40,000 in 2025 / $40,400 in 2026), more $500k-$1M filers in high-tax states will see AMT bite again.
Can the AMT exemption be fully phased out?
Yes. With 25% reduction per dollar of AMTI excess, the exemption hits zero when AMTI exceeds the phaseout start by 4× the exemption. For 2025 single filers: exemption fully phased out at AMTI of $978,750. For 2026 single: $860,400. At that point AMT applies to the entire AMTI at 26%/28% with no exemption shield.
What is the AMT credit and how do I recover it?
Form 8801 tracks the Minimum Tax Credit (MTC) — the portion of prior-year AMT attributable to "deferral" preferences (most commonly ISO bargain element). In future years where regular tax exceeds tentative minimum tax, you can apply the MTC up to that excess. The credit carries forward indefinitely under §53. "Exclusion" preferences (SALT add-back, standard deduction) do NOT generate creditable MTC — they're permanently disallowed.
Does the AMT apply to capital gains?
Long-term capital gains and qualified dividends keep their preferential 0/15/20% rates for AMT purposes — the AMT rate structure does NOT apply to LTCG. However, large LTCG raises AMTI, which can phase out your exemption and pull more of your ORDINARY income into the AMT zone. A surprise common to founders selling QSBS partially-excluded stock or executives realizing big concentrated positions: zero LTCG rate change, but ordinary income takes a small AMT hit because the exemption phased out.
What's the difference between AMT and the regular 24%/32%/35%/37% brackets?
Regular federal tax uses seven graduated brackets (10/12/22/24/32/35/37%) applied to taxable income after the standard or itemized deduction. AMT uses just two rates (26% and 28%) applied to AMTI after the exemption. AMT also disallows several deductions that the regular calculation allows. You pay the GREATER of the two — so high-bracket filers with relatively few preference items typically owe regular tax, and filers with high SALT, large ISO exercises, or significant miscellaneous deductions can flip into AMT.
Do trusts and estates pay AMT?
Yes. Trusts and estates compute their own AMT on Form 1041 Schedule I, but with much lower exemptions ($30,700 for 2025; indexed annually) and the same 26%/28% rates. Because trust regular tax already hits 37% at ~$15,650 (2025) of taxable income, AMT rarely binds for non-grantor trusts unless they hold significant private activity bonds.
Sources
Key Tax Terms
Alternative Minimum Tax (AMT)
A parallel tax system that ensures high-income taxpayers pay at least a minimum amount of tax. For 2025, the AMT exemption is $88,100 (single) and $137,000 (married filing jointly).
Itemized Deduction
Specific expenses you can deduct instead of taking the standard deduction, including mortgage interest, state/local taxes (SALT cap: $40,000 for 2025+ under OBBBA, phased out for high earners), charitable donations, and medical expenses.
Taxable Income
The portion of your income that is actually subject to federal income tax, calculated by subtracting the standard or itemized deduction from your AGI.
Effective Tax Rate
Your total federal income tax divided by your total income, expressed as a percentage. It represents the average rate at which your income is actually taxed.
Adjusted Gross Income (AGI)
Your gross income minus specific adjustments such as student loan interest, IRA contributions, and self-employment tax. AGI is the starting point for calculating your taxable income.
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