AMT Calculator (Alternative Minimum Tax)
Print| AMTI Income Base | $0.00 |
The Alternative Minimum Tax (AMT) is a parallel federal income tax system established by Congress to ensure that high-income taxpayers who benefit from tax preferences, deductions, and incentive stock options (ISOs) pay at least a minimum percentage of tax. Taxpayers must calculate tax liability under both standard federal income tax rules and AMT rules via IRS Form 6251, paying whichever amount is higher.
Our free AMT Calculator computes your Alternative Minimum Taxable Income (AMTI), applies statutory AMT exemption limits and phaseouts, and determines whether you owe AMT.
How to Calculate Alternative Minimum Tax (AMT)
The AMT recalculates tax liability by eliminating key deductions (such as state and local tax deductions) and adding back preferential tax items like ISO bargain elements.
The AMT Calculation Steps:
Step 1: AMTI = Regular Adjusted Gross Income (AGI) + Tax Preference Items + Disallowed Deductions
Step 2: AMT Base = AMTI - Statutory AMT Exemption Amount (after Phaseout)
Step 3: Tentative Minimum Tax = ( AMT Base × AMT Rate ) - Foreign Tax Credit
Step 4: AMT Owed = MAX( 0, Tentative Minimum Tax - Regular Federal Tax Liability )
Statutory AMT Tax Rates:
- 26% Rate: Applies to AMT base amounts up to statutory threshold ($220,700 for single / joint filers).
- 28% Rate: Applies to AMT base amounts exceeding statutory threshold.
Statutory AMT Exemptions & Phaseout Thresholds
The IRS grants a generous statutory AMT exemption, which gradually phases out for higher-income filers:
| Filing Status | Statutory AMT Exemption | Exemption Phaseout Begins (AMTI) | Exemption Completely Phased Out |
|---|---|---|---|
| Single / Head of Household | $85,700 | $609,350 | $952,150 |
| Married Filing Jointly | $133,300 | $1,218,700 | $1,751,900 |
| Married Filing Separately | $66,650 | $609,350 | $875,950 |
Step-by-Step Calculation Example
A single tech employee exercises Incentive Stock Options (ISOs) with the following income details:
- Regular Salary AGI: $200,000
- ISO Exercise Bargain Element (Fair Market Value – Strike Price): $150,000
- Regular Federal Income Tax Liability: $35,000
Step 1: Calculate Alternative Minimum Taxable Income (AMTI)
AMTI = $200,000 (AGI) + $150,000 (ISO Spread) = $350,000
Step 2: Apply Statutory AMT Exemption
Since AMTI ($350,000) is below the $609,350 phaseout threshold, full $85,700 exemption applies:
AMT Tax Base = $350,000 - $85,700 = $264,300
Step 3: Calculate Tentative Minimum Tax
First $220,700 @ 26% = $57,382.00
Remaining $43,600 @ 28% = $12,208.00
Tentative Minimum Tax = $57,382 + $12,208 = $69,590.00
Step 4: Compute AMT Owed
AMT Owed = $69,590 (Tentative Minimum Tax) - $35,000 (Regular Tax) = $34,590.00
Frequently Asked Questions (FAQ)
What triggers the Alternative Minimum Tax (AMT)?
Common AMT triggers include exercising Incentive Stock Options (ISOs) without selling the shares in the same calendar year, high state and local tax (SALT) add-backs, and significant capital gains that push income into AMT phaseout ranges.
What is the Minimum Tax Credit (AMT Credit)?
If you pay AMT due to timing items (such as ISO stock exercises), you generate an AMT Credit (IRS Form 8801) that can be carried forward indefinitely to reduce regular tax liability in future tax years when regular tax exceeds tentative minimum tax.
Did the Tax Cuts and Jobs Act (TCJA) reduce AMT risk?
Yes. The TCJA substantially raised statutory AMT exemption amounts and phaseout thresholds through 2025, drastically reducing the number of middle-to-upper-income taxpayers subject to AMT.