Determine your Alternative Minimum Tax exposure for tax year 2025. Calculates AMTI, exemption with phase-out, tentative minimum tax at 26%/28%, and the AMT owed (if any) above your regular tax liability.
Add back the items disallowed for AMT. Check each that applies and enter the amount. Under TCJA (still in effect through 2025) several common pre-2018 preferences are suspended — they're noted below.
Suspended through 2025 (TCJA): personal exemption add-back, miscellaneous itemized deductions, standard deduction add-back. These return only if TCJA provisions sunset — OBBBA permanently extended most individual provisions, so these likely remain suspended.
AMT is a parallel tax system. You owe the higher of regular tax or AMT.
TCJA dramatically reduced AMT impact — under 200K returns owed AMT in 2023 vs ~5M before TCJA.
Most common modern trigger: ISO exercises with bargain element > AMT exemption.
AMT paid generates a credit (Form 8801) carryforward usable against future regular tax.
The AMT is a parallel tax system that ensures higher-income taxpayers with large deductions or preference items still pay a minimum amount. You compute your tax twice — once under the regular rules and once under the AMT rules on Form 6251 — and pay whichever is higher. To get alternative minimum taxable income (AMTI) you start from regular taxable income and add back items the AMT disallows, most commonly the state and local tax deduction, along with adjustments such as the bargain element on incentive stock options.
For 2025 the AMT exemption is $88,100 for single and head-of-household filers, $137,000 for married filing jointly, and $68,500 for married filing separately. The exemption phases out by 25 cents per dollar of AMTI above $626,350 (single/HoH) or $1,252,700 (joint). AMT is then 26% of net AMTI up to $239,100 ($119,550 for MFS) and 28% above that.
A married couple has $700,000 of AMTI for 2025, mostly from exercising incentive stock options. Their $137,000 exemption is not yet reduced because AMTI is below the $1,252,700 phase-out start. Net AMTI is $700,000 − $137,000 = $563,000. The tentative minimum tax is 26% × $239,100 + 28% × ($563,000 − $239,100) = $62,166 + $90,692 = $152,858. If their regular tax is $140,000, they owe $12,858 of AMT on top.
The classic modern AMT trigger is exercising and holding incentive stock options: the spread between the strike price and the fair market value is an AMT preference even though it is not regular-tax income that year. Long-term capital gains and qualified dividends keep their preferential rates under the AMT, so they rarely cause AMT by themselves, but they raise AMTI and can erode the exemption. OBBBA made the higher TCJA exemption amounts permanent but, beginning in 2026, lowered the exemption phase-out starting points to $500,000 (single) and $1,000,000 (joint), which will pull more high earners into AMT.
$88,100 for single and head-of-household filers, $137,000 for married filing jointly, and $68,500 for married filing separately, with a 25%-per-dollar phase-out beginning at $626,350 of AMTI (single/HoH) and $1,252,700 (joint).
Exercising incentive stock options and holding the shares is the most common trigger today, because the bargain element is an AMT preference. Large state and local tax deductions, certain accelerated depreciation, and private-activity-bond interest also add to AMTI.
Yes. The One Big Beautiful Bill Act made the elevated TCJA exemption amounts permanent, but it lowered the exemption phase-out thresholds starting in 2026 to $500,000 (single) and $1,000,000 (joint), expanding AMT exposure for upper-income filers in future years.