Calculate whether you owe the Alternative Minimum Tax for 2025. Compare your regular tax liability against the tentative minimum tax to determine if AMT applies, with full exemption phase-out analysis.
A married couple filing jointly has $300,000 in taxable income, regular tax of $52,000, and deducts $25,000 in state and local taxes. They also have $5,000 in private activity bond interest.
AMTI = $300,000 + $25,000 + $5,000 = $330,000
AMT Exemption (2025 MFJ) = $137,000 (no phase-out at this AMTI)
Tentative AMT = $330,000 − $137,000 = $193,000 → 26% × $193,000 = $50,180
Since tentative AMT ($50,180) is less than regular tax ($52,000), no AMT is owed. The SALT deduction alone at this income level may not trigger AMT after TCJA changes.
A single filer has $200,000 in taxable income, regular tax of $38,000, and exercises incentive stock options with a $120,000 bargain element. They also have $8,000 in state tax deductions.
AMTI = $200,000 + $120,000 + $8,000 = $328,000
AMT Exemption (2025 Single) = $88,100, phase-out begins at $626,300 — no phase-out
Tentative AMT = ($328,000 − $88,100) × 26% = $239,900 × 26% = $62,374
AMT Due = $62,374 − $38,000 = $24,374
ISO exercises are a common AMT trigger. The bargain element (spread between exercise price and FMV) is included in AMTI but not regular taxable income.
A married couple filing jointly has $1,500,000 in taxable income with regular tax of $420,000. They have $30,000 in state tax deductions and $10,000 in miscellaneous itemized deductions.
AMTI = $1,500,000 + $30,000 + $10,000 = $1,540,000
Base exemption (MFJ) = $137,000. Phase-out = 25% × ($1,540,000 − $1,252,600) = 25% × $287,400 = $71,850
Exemption after phase-out = $137,000 − $71,850 = $65,150
Tentative AMT = 26% × $239,100 + 28% × ($1,474,850 − $239,100) = $62,166 + $346,010 = $408,176
At this income level, the AMT exemption is substantially phased out. The 28% bracket applies to income above $239,100 of the taxable amount over the exemption.
The Alternative Minimum Tax (AMT) is a parallel tax system designed to ensure high-income taxpayers pay at least a minimum amount of federal income tax. It adds back certain tax preferences and adjustments to regular taxable income, then applies a separate rate structure with its own exemption amounts.
| Filing Status | Exemption | Phase-Out Begins | Fully Phased Out |
|---|---|---|---|
| Single | $88,100 | $626,300 | $978,700 |
| Married Filing Jointly | $137,000 | $1,252,600 | $1,800,600 |
| Married Filing Separately | $68,500 | $626,300 | $900,300 |
| Head of Household | $88,100 | $626,300 | $978,700 |
Property taxes and state income taxes deducted on Schedule A must be added back for AMT. The most common AMT trigger for high-income taxpayers in high-tax states.
The bargain element on ISO exercises is included in AMTI but not in regular taxable income, making ISOs a major AMT trigger.
Interest from private activity municipal bonds is tax-exempt for regular tax but included in AMTI. Review your bond holdings for this preference item.
For AMT, medical expenses are deductible only to the extent they exceed 10% of AGI (vs 7.5% for regular tax). The difference is added back.
Unreimbursed employee expenses, tax preparation fees, and investment expenses deductible for regular tax are completely disallowed for AMT.
Accelerated depreciation (MACRS) used for regular tax may need to be recalculated using the alternative depreciation system (ADS) for AMT.
Keep your AMTI below the phase-out threshold if possible. Timing income and deductions can help you avoid the AMT phase-out range.
Exercise ISOs in lower-income years, or stagger exercises across multiple years to avoid a large AMT spike in a single year.
While TCJA capped the SALT deduction at $10,000, the AMT add-back still applies to any SALT you do deduct. Plan accordingly.
If you pay AMT due to timing differences (like ISO exercises), you may be eligible for the AMT credit in future years when the AMT calculation reverses.
The Alternative Minimum Tax (AMT) is a parallel tax system operating alongside the regular federal income tax, originally created in 1969 to prevent high-income taxpayers from using deductions to eliminate their entire tax liability. The AMT system requires you to calculate your tax liability twice — under regular rules and under AMT rules — and pay the higher amount. Many deductions that reduce your regular tax bill are disallowed or limited under the AMT, including state and local taxes, certain medical expenses, miscellaneous itemized deductions, and the bargain element of incentive stock options. The Tax Cuts and Jobs Act (TCJA) of 2017 reduced the number of taxpayers subject to AMT by increasing exemption amounts and phase-out thresholds.
First, the AMT exemption replaces the standard deduction and personal exemptions. For 2025, the AMT exemption amounts are $88,100 for single and head of household filers, $137,000 for married filing jointly, and $68,500 for married filing separately. These exemptions phase out at income thresholds of $626,300 for single, HOH, and MFS filers, and $1,252,600 for MFJ filers — the exemption is reduced by 25 cents for every dollar of AMTI above the threshold.
Second, the AMT rate structure uses just two brackets: 26% on the first $239,100 of taxable AMTI (after the exemption) and 28% on any excess above that. This is flatter than the regular tax brackets (seven rates from 10% to 37%), meaning the AMT often catches taxpayers with high deductions whose regular tax rate is lower than 26%.
Third, the AMT disallows certain deductions like state and local taxes (SALT), the standard deduction, personal exemptions, miscellaneous itemized deductions subject to the 2% floor, and home equity debt interest not used for home improvement.
📋 2025 AMT Exemption Reference: Single/HOH: $88,100 (phase-out begins at $626,300) | MFJ: $137,000 (phase-out begins at $1,252,600) | MFS: $68,500 (phase-out begins at $626,300). The AMT has two brackets: 26% on the first $239,100 of taxable AMTI and 28% on the excess.
While the TCJA significantly reduced the AMT's reach, certain taxpayers remain at higher risk. Residents of high-tax states (California, New York, New Jersey, etc.) are vulnerable because the SALT deduction is completely disallowed under the AMT. Taxpayers who exercise incentive stock options face major AMT risk because the ISO bargain element is included in AMTI but not regular taxable income. High-income taxpayers with tax-exempt interest from private activity municipal bonds must include that interest in AMTI. Large families with significant itemized deductions may also see AMT exposure. Taxpayers with AMTI between the exemption amount and the phase-out threshold are most likely to owe AMT, as every dollar of additional income is taxed at 26% or 28% under AMT versus potentially lower regular rates.
Our AMT Calculator is designed for several important use cases. Year-end tax planning: Estimate whether you'll be subject to AMT and adjust withholding or estimated tax payments accordingly. ISO exercise planning: Before exercising incentive stock options, run the numbers to see the potential AMT impact. Staggering exercises across multiple years can help avoid a large AMT bill. Investment portfolio review: If you hold private activity municipal bonds, the calculator shows the tax cost of that interest under the AMT system. Estimated tax payments: If subject to AMT, your required estimated payments may be higher than expected — plan ahead with the calculator.
The calculator is also useful for comparing different tax scenarios, such as how additional charitable contributions (allowed under both systems), additional SALT payments, or changes in investment income affect your total tax liability under both systems.
⚠️ Important Disclaimer: This Alternative Minimum Tax Calculator is for informational and educational purposes only. It provides estimates based on 2025 AMT exemption amounts, phase-out thresholds, and rate structures. Actual AMT liability may differ based on your specific tax situation, including the Alternative Minimum Tax Foreign Tax Credit, net operating losses, and other complex adjustments not accounted for here. This calculator does not provide tax advice. Consult a qualified tax professional for personalized tax planning and compliance.