Alternative Minimum Tax (AMT) Calculator
Work out the extra federal tax you owe under the Alternative Minimum Tax on IRS Form 6251 — using the 2025 exemption, phaseout and 26%/28% TMT rates for your filing status.
Alternative Minimum Tax owed
£5,094.00
- AMTI (Alternative Minimum Taxable Income)
- £300,000.00
- AMT exemption (after phaseout)
- £88,100.00
- AMT base
- £211,900.00
- Tentative Minimum Tax (TMT)
- £55,094.00
- Regular tax
- £50,000.00
AMT = max(0, TMT − regular tax). AMTI of $300,000 less the 2025 exemption of $88,100 gives an AMT base of $211,900, taxed at 26% up to $239,100 and 28% above. Tentative Minimum Tax is $55,094. You owe an additional $5,094 of AMT on top of your regular tax.
How to use this calculator
Pick your filing status — it sets the 2025 exemption ($88,100 single or head of household, $137,000 married filing jointly, $68,500 married filing separately) and the breakpoint between the 26% and 28% TMT rates. Enter your regular taxable income from Form 1040 Line 15 — that is Form 6251 Line 1. Add your AMT preferences and adjustments (Form 6251 lines 2a through 3): the bargain element on incentive stock options exercised but not sold, state-tax refunds that were itemised in a prior year, the difference between regular and AMT depreciation, tax-exempt interest from private activity bonds, etc. Finally, enter your regular tax from Form 1040 Line 16. The calculator computes AMTI, the phased-out exemption, the AMT base, Tentative Minimum Tax (TMT), and the extra AMT you owe — the figure on Form 6251 line 11 that flows through to Form 1040 Schedule 2 line 1.
How the calculation works
AMT is a parallel tax system. AMTI starts from regular taxable income and adds back preferences and adjustments that the regular tax allowed but the AMT does not. The 2025 exemption (Rev. Proc. 2024-40) is subtracted from AMTI to give the AMT base, but the exemption itself phases out at 25¢ per $1 of AMTI above $626,350 (single, head of household and married filing separately) or $1,252,700 (married filing jointly). The AMT base is then taxed at 26% up to $239,100 ($119,550 if filing separately) and 28% above — this is Tentative Minimum Tax. AMT owed is the excess of TMT over the regular tax: AMT = max(0, TMT − regular tax). Long-term capital gains and qualified dividends keep their preferential regular-tax rates inside TMT (Form 6251 Part III), and this calculator treats your AMT base as ordinary — if you have material LTCG, use the Form 6251 Part III worksheet to refine.
Worked example
A single filer reports $250,000 of regular taxable income (Form 1040 Line 15) after exercising incentive stock options with a $50,000 bargain element. Their regular tax (Line 16) is $50,000. AMTI = $250,000 + $50,000 = $300,000. AMTI is well below the $626,350 single-filer phaseout threshold, so the full $88,100 exemption applies. AMT base = $300,000 − $88,100 = $211,900 — below the $239,100 breakpoint, so the entire base is taxed at 26%. TMT = 26% × $211,900 = $55,094. AMT owed = max(0, $55,094 − $50,000) = $5,094. They write $5,094 on Form 6251 line 11 and carry it to Schedule 2 line 1, adding it to their regular tax.
Frequently asked questions
Who actually pays AMT after the 2017 Tax Cuts and Jobs Act?
Far fewer filers than before. TCJA raised the AMT exemption (the 2025 exemption of $88,100 single / $137,000 joint is roughly double the pre-2018 amount), raised the phaseout threshold dramatically (from about $160,000 to $626,350 single), and capped the state and local tax deduction at $10,000 for regular tax — which collapsed the gap between regular and AMT for itemisers. The typical AMT payer in 2025 is someone exercising and holding incentive stock options (ISO bargain element is a preference even though no cash was received), holders of substantial private activity bond interest, owners of accelerated-depreciation assets, taxpayers with large itemised state and local taxes that exceed the SALT cap because of an unusual carryover, or filers with very high income that triggers exemption phaseout. Treasury estimates the post-TCJA AMT payer count is well under 1% of returns versus roughly 5% in 2017.
How does ISO exercise create AMT even when I have no cash?
Incentive stock options are not taxable for regular tax purposes when exercised — only when the underlying shares are sold (and at long-term capital gains rates if the holding-period rules are met). For AMT, IRC §56(b)(3) treats the spread between the exercise price and the fair market value at exercise as a preference item, added to AMTI in the year of exercise. If you exercise and hold ISOs in a year when the FMV is much higher than your strike, you can owe substantial AMT on income you have not realised in cash. The good news: the AMT paid creates a minimum tax credit (Form 8801) usable against regular tax in future years when there is no AMT, often recovered fully when the shares are eventually sold. Run the AMT projection before the December 31 deadline so you can adjust the exercise quantity if cash AMT would be unmanageable.
Why does the exemption phase out at higher income?
Congress wanted the AMT exemption to benefit middle-income filers, not very high earners. Above the phaseout threshold ($626,350 single / $1,252,700 joint in 2025) the exemption drops by 25 cents for every additional dollar of AMTI. A single filer is fully phased out — exemption reduced to zero — once AMTI reaches $626,350 + ($88,100 / 0.25) = $978,750. Married filing jointly fully phases out at $1,252,700 + ($137,000 / 0.25) = $1,800,700. Inside the phaseout range each extra $1 of AMTI raises the AMT base by $1.25, so the effective marginal AMT rate is 26% × 1.25 = 32.5% (or 28% × 1.25 = 35% above the breakpoint) — a bump that high-income optimisers track carefully.
Do long-term capital gains and qualified dividends keep their lower rate under AMT?
Yes. AMT is structurally separate from regular tax, but Form 6251 Part III lets you apply the same 0% / 15% / 20% capital gains rates to long-term capital gains and qualified dividends inside the TMT computation. The 26% / 28% AMT rates only apply to the ordinary portion of the AMT base. This calculator treats the entire AMT base as ordinary — appropriate for most ISO-driven or salary-driven AMT scenarios — but if your AMTI has material long-term capital gains or qualified dividends, the Form 6251 Part III worksheet will give a slightly lower TMT than the simple calculation here.
What is the minimum tax credit and can I get the AMT back?
AMT paid because of timing differences (deferral preferences like ISO bargain element, accelerated depreciation) generates a minimum tax credit under IRC §53, claimed on Form 8801. The credit can offset regular tax in future years to the extent regular tax exceeds that year's TMT. AMT paid because of exclusion preferences (state and local tax deduction, private activity bond interest) does not generate a credit — it is permanently lost. The classic ISO case is a credit case: you owe AMT in the year of exercise on the spread, then recover it (often in full) when you later sell the shares and your regular tax on the gain exceeds TMT. Track Form 8801 carryforward carefully — it is easy to forget the credit exists.
Does the standard deduction get added back for AMT?
No — and this is a TCJA change worth knowing. Before 2018 the standard deduction and personal exemptions were added back for AMT, which is why many middle-income filers fell into AMT. From 2018 through 2025, neither the standard deduction nor (effectively non-existent) personal exemptions are added back; AMTI starts from Form 1040 Line 15 which already reflects the standard deduction. Itemisers still add back the state and local tax deduction and miscellaneous itemised deductions when computing AMTI, but post-TCJA SALT is capped at $10,000 for regular tax anyway, so the add-back is small. Combined with the raised exemption and phaseout, that is why AMT has become rare for filers without ISOs.