AMT Calculator — Alternative Minimum Tax

The Alternative Minimum Tax (AMT) is a parallel tax system designed to ensure that high-income taxpayers pay a minimum amount of tax, even if they have significant deductions and credits under the regular tax system. You calculate your tax under both the regular and AMT systems, and you owe whichever amount is higher. The AMT uses its own set of rates (26% and 28%) and disallows certain deductions like state and local tax (SALT) deductions.

Taxpayers most likely to owe AMT include those with high state and local tax deductions, large numbers of dependents, significant income from incentive stock option exercises, or substantial miscellaneous deductions. The AMT most commonly affects taxpayers with incomes between $200,000 and $500,000 who live in high-tax states. The SALT cap (raised to $40,000 for 2025 by the One, Big, Beautiful Bill Act, from $10,000 previously) affects how many taxpayers are subject to AMT.

AMT preference items are deductions and income adjustments that are treated differently under the AMT system. The most common include state and local tax deductions, the bargain element from exercising incentive stock options (ISOs), certain tax-exempt interest from private activity bonds, and accelerated depreciation. These items are added back to your taxable income when calculating your Alternative Minimum Taxable Income (AMTI).

For the 2025 tax year, the AMT exemption amount is $88,100 for single filers and $137,000 for married filing jointly. This exemption begins to phase out at $626,350 for single filers and $1,252,700 for married filing jointly. The exemption effectively shields a portion of your AMTI from the AMT calculation, meaning you only owe AMT if your AMTI exceeds these thresholds after applying the exemption.