AMT Calculator

How the Alternative Minimum Tax works

The Alternative Minimum Tax is a second tax system that runs alongside the regular income tax. Congress created it so that high earners with large deductions and preference items cannot reduce their tax bill below a baseline. You figure your tax twice: once under regular rules, once under AMT rules, and you pay the higher of the two.

The AMT calculation lives on IRS Form 6251. It starts from your regular taxable income, adds back items the regular system allowed, subtracts a flat exemption, and applies a two-rate schedule. If the result, the tentative minimum tax, is larger than your regular tax, the gap becomes your AMT.

How AMT is calculated step by step

The process moves through five steps. First, take your regular taxable income from Form 1040 line 15. Second, add back AMT items: the SALT deduction (or the standard deduction if you claimed it), the ISO exercise spread, private activity bond interest, and certain depreciation differences. The total is your Alternative Minimum Taxable Income (AMTI).

Third, subtract the AMT exemption for your filing status, reduced if your AMTI is high enough to trigger the phaseout. Fourth, apply the 26% and 28% rates to the remaining AMT base to get the tentative minimum tax. Fifth, compare that figure to your regular tax: if the tentative minimum tax is higher, the difference is the AMT you owe.

2026 AMT exemptions, phaseouts, and OBBBA changes

For 2026 the AMT exemption is $90,100 for Single and Head of Household filers, $140,200 for Married Filing Jointly and Qualifying Surviving Spouse, and $70,100 for Married Filing Separately. The exemption starts to shrink once AMTI passes $500,000 (most filers) or $1,000,000 (joint filers).

The One Big Beautiful Bill changed two things that matter here. It returned the phaseout thresholds to their 2018 levels, and it raised the phaseout rate so the exemption now drops 50 cents for every dollar of AMTI above the threshold, up from 25 cents. Together these changes erase the exemption faster and pull more high earners into AMT territory.

Common AMT triggers and how to plan around them

The classic trigger is exercising incentive stock options and holding the shares: the bargain element is invisible to the regular tax but counts in full for AMT. Large SALT deductions in high-tax states are another common cause, since that deduction is added straight back into AMTI. Private activity bond interest, normally tax-free, is also a preference item.

Planning options include spreading ISO exercises across multiple years, exercising early when the spread is small, and tracking the Minimum Tax Credit that timing-based AMT generates so you can recover it in later years. To see how AMT interacts with the rest of your return, you can download Tax47 and model a full year in one place.