AMT (Alternative Minimum Tax) calculator

AMT — the parallel tax system that catches high-deduction filers

The Alternative Minimum Tax was created to ensure high-income filers pay at least a minimum tax, regardless of how many deductions they claim. You compute regular tax AND AMT — pay whichever is higher.

Who triggers AMT post-TCJA

The 2017 TCJA gutted AMT exposure for most filers by raising exemptions and phase-out thresholds dramatically. Pre-TCJA: ~5M filers owed AMT. Post-TCJA: ~200,000.

The remaining AMT-prone profiles:

• ISO exercise without sale: bargain element triggers AMT preference
• Very high LTCG year: combined with state-tax-heavy years
• Large SALT before TCJA cap: less of a factor now
• Private activity bond interest: tax-exempt for regular tax but AMT preference
• Depreciation differences: accelerated MACRS vs straight-line preference items

The mechanics

AMTI = AGI + AMT preferences/adjustments
exemption = $85,700 single (2024) [phase-out at $609k+]
AMT base = AMTI − exemption (after phase-out)
tentative AMT = 26% on first $232,600, 28% above
AMT owed = tentative AMT − regular tax (if positive)

ISO + AMT — the silicon valley trap

Exercising Incentive Stock Options without selling triggers AMT. The "bargain element" (FMV − strike price × shares) becomes an AMT preference. You can owe AMT on PHANTOM income — money you never received because you didn't sell. This is why early-employee ISO exercises often need careful coordination with tax timing.

The credit recovery

AMT paid creates a credit (Min Tax Credit) usable in future years when regular tax exceeds AMT. So an ISO-AMT year produces a credit you can recover on subsequent stock sales when LTCG drives regular tax above AMT.